Latest World Bank report bad news for PH
Athena Athena, The Malaysian Insight
THE latest World Bank report shows that Malaysia’s economy is growing weaker. Much weaker.
Out of the 15 Asian economies analysed in the report, Malaysia was downgraded the most. Nikkei’s headline said: World Bank sharply cuts Malaysia’s 2018 growth view
Surprisingly, none of our local media carried this story last week even though it is of great significance to all of us.
The World Bank forecasts that under current conditions, in 2018, Malaysia’s growth rate will lower to 4.9% (compared to the 5.4% forecast earlier) and in 2019, decrease further.
Malaysia also released our August 2018 foreign trade figures and it was a bloodbath.
“Malaysia’s August trade surplus shrinks most in 45 months“ said Nikkei. Exports actually fell 5% month on month while imports surged due to PH’s tax-free holiday causing consumers to binge-buy on imported goods and cars – leaving us with a meager RM1.6 billion in trade surplus.
This monthly trade surplus had plunged from more then RM10 billion before GE14. Even this small surplus in August was made possible only because oil prices had risen. if not for the surging oil prices due to USA sanctions against Iran oil. If not, Malaysia would have registered it’s first trade deficit in 20 years.
Of particular concern is that our government tells us that the fall in our palm oil exports has continued to worsen in August. Thy tell us palm oil exports fell 27% compared to a year ago.
Also, last week, BNM announced that our FOREX reserves at the end of September has dropped yet again by US$1.3 billion – the 5th month of continuous drop which further confirmed that foreign outflows from investors continuing to pull money out of Malaysia after the elections has not stopped.
Our Forex Reserves were increasingly sharply before GE14 but immediately after it reversed directions to continue to fall.
This is also reflected in our Ringgit which has continue its drop to RM4.16 vs the US Dollar which is a 30 sen drop before May 9.
There is less than three months to go until 2019. Instead of progressing, the new Malaysia is falling behind its Asian neighbours.
The new World Bank report describes Malaysia’s economy: “The main risks to growth arise from the policy uncertainty in the local and major economies, geopolitical developments, populist policies, slowing investment growth and commodity price volatility.”
While most Asian economies are coping well, Malaysia’s is in sharp decline, because it has not adapted to both global and domestic economic conditions.
The report also singles out Malaysia as one of only two Asian economies where household debt “exceeds 70% of GDP”. Many economists have concluded that Malaysia’s debt bubble is about to explode.
International ratings agency Fitch also noted that this household debt ratio has increased sharply during the 3 months tax-free holiday spending spree and warned that consumers loaded up on new car loans and credit-card debt will see slower consumer spending in the next few years as they try to repay their debts.
Let’s take aside the numerous manifesto promises that have not been delivered and look at the only substantial one that has actually been delivered, abolishing GST.
We wanted to abolish GST because we wanted lower prices. Unfortunately this has not happened and the reverse actually happened instead when SST replaced GST.
Two days ago, the Domestic Economy and Consumer Ministry said it had done a month long survey on 384 goods and services typically bought by Malaysians since SST started on 1st September.
51 item alami kenaikan harga susulan pelaksanaan SST
Out of these 384 items the Minister surveyed, they found that 51 items actually increased in prices between 5% to 10%, 29 items reduced a pitiful 4% to 6% while the remaining 304 items experienced no change when compared to the prices during GST.
The popular wisdom is that more items will increase in prices over the next months as retailers and distributors deplete their tax-free inventory and replace them with inventory that now attract 10% sales tax.
Malaysians are now waking up and asking why we bothered to replace GST with SST in the first place since it has not achieved its main goal to reduce prices and the prices continue to increase while putting our government under immense revenue strain?
During his failed visits to China, USA and UK, Mahathir had said that Rich countries should not bully poor countries”. Along with his confrontational stand and his reluctance to accept the CPPTPP free trade agreement, the increasing protectionist policies will mean that Malaysia will continue to isolate itself from the world economy and hurt ourselves economy.
One analyst warns out that if we do not sign this free trade agreement, we will lose out and even fall behind Vietnam within the next few years.
Yes, the communist country that was in a decades-long war not too long ago will soon over-take us as they have now embraced free-trade while we isolate ourselves and make as many enemies in the world as we can.
We have offended China, Singapore, USA, Israel, Saudi Arabia and the UAE so far. How many more enemies do we want to make? Japan alone cannot save us.Neither can the 3rd national car which Japan seems hell-bent in convincing our PM to do.
Should we suffer economically and isolate ourselves from world trade for the next few years just so that we can feel proud that we were brave enough to have scolded the richer nations?
Instead of progressing, the new Malaysia is falling behind its Asian neighbours.
Is PH more focused on continuing to assign blame to the previous BN government, more focused on continuing to unleash their political vengeance on Najib and his family.
Will PH continue to tell sweet stories to pamper to their supporters who are now fast losing hope now. Can you blame us?
All Malaysians should read the new World Bank reports and our trade figures to draw their own conclusions about whether Pakatan Harapan is managing the country correctly.
