economic prospects


IMF sees emerging Asia as top global growth engine

BEIJING, April 17 — The IMF said today it remains upbeat about the economic prospects of emerging Asia, labelling the region “the most important engine of global growth” despite concerns over trade disputes and mounting debt. The…

Investors wary of Europe’s stimulus status

Fundamental outlook THE European Central Bank (ECB) has retained its monetary stance but investors are worried about the region’s economic prospects as the central bank dials back its monetary stimulus pledge. The US payroll grew beyond forecast, signalling a possible rate hike soon. China regained its consumer inflation growth. The US ISM services index grew […]

World Bank: Malaysia will continue to deliver robust growth

KUALA LUMPUR: Malaysia will continue to deliver robust growth, well-backed by its diversified economy, a wide range of reform initiatives and strong macroeconomic policy frameworks to withstand external shocks, said World Bank Group. Its Development Prospects group director, M. Ayhan Kose, said the Malaysian economy has been doing well and the real growth rate for […]

Malaysia will continue to deliver robust growth: World Bank

KUALA LUMPUR: Malaysia will continue to deliver robust growth, well backed by its diversified economy, a wide range of reform initiatives and strong macroeconomic policy frameworks to withstand external shocks, said World Bank Group.

Its Development Prospects Group director, M. Ayhan Kose, said the Malaysian economy has been doing well and the real growth rate for 2017 would likely be better than 2016.

“Over the longer term perspective, Malaysia has undertaken a wide range of reforms and these had created the type of benefits that you (can) expect in an economy.

“The economy is more diversified today than it was 20 years ago, (with) institutions stronger and so are the macroeconomic policy frameworks. So the potential growth is still at higher respectable level,” he told reporters after a briefing on the “Global Economic Prospect” today.

Last month, the World Bank, in its Global Economic Prospects report, said Malaysia’s gross domestic product growth was expected to grow at 5.2% this year.

Kose said the report also emphasised the repetition of the global crisis history and recession.

“This doesn’t necessarily mean (that) there will be another recession soon. At the same time, given the fact that history repeats itself, it’s a good to make sure that the financial system is resilient and policy space available to implement the type of policies necessary to stimulate the economy if that type of crisis happens.” – Bernama

World Bank: Look out for a crisis


KUALA LUMPUR (Feb 7): The world should keep its eyes peeled for a potential global economic and financial crisis, especially in light of the vibrant markets it is currently seeing, The World Bank said. This is because financial stress is a near-term risk to strong economic growth forecasts. World Bank director for development prospects group Ayhan Kose raised the question of whether history might repeat itself, highlighting that every decade since the 1970s had seen a global economic crisis accompanied by a recession. “The likelihood of a potential crisis shouldRead More

Global economy on an upturn but downside risks remain, says World Bank

KUALA LUMPUR, Feb 7 — The global economy is experiencing a broad-based cyclical upturn, which is expected to be sustained over the next couple of years, although with downside risks. “Growth in potential output (full-employment output) is…

Markets tumble: Is it time to be fearful or greedy?


KUALA LUMPUR: Screens in dealing rooms continued to be in a sea of red yesterday. Share prices plunged in a domino-style effct, starting on Wall Street, then in Asia, and Europe. The selling wave is nerve-racking, reminding many of the global financial crisis 10 years ago. On the local front, some RM42.26 billion was wiped off Bursa Malaysia yesterday. Decliners sharply outnumbered gainers by 1,215 to 121, with another 198 counters traded unchanged. The benchmark index FBM KLCI slipped 40.62 points or 2.2% to 1,812.45 as of closing, recovering fromRead More

HSBC: Expats ride on Asia growth with Malaysia a place to settle

KUCHING: Asia continues to provide promising economic prospects and improved quality of life that appeal to professionals and entrepreneurs both from within the region and across the globe, according to HSBC’s new Expat Explorer survey. While Singapore has again been rated by expats as the best country in the world to live and work, Malaysia […]

Consumer sentiment-economic growth disconnect may be due to income distribution disparity

KUALA LUMPUR: The disconnect between consumer sentiments on the ground, which is lacking the “feel good sentiments”, and the stellar growth in terms of gross domestic product (GDP) could be due to disparity in income distribution.

“Looking at the average growth numbers some parts of the economy are growing more strongly than the others (and) some Malaysians are making more in that growth than the others”, said World Bank Group lead economist, macroeconomics & fiscal management global practice, Richard Record today.

He also said that the inflationary pressure on food and housing, which is continuously on the rise, has resulted in the poorest 10% spending 75% of their income on the two necessities.

“In the middle of last year we saw strong inflationary pressure around food and housing products. If you breakdown Malaysians from poorest 10% to the richest 10% what you will find is that those in the bottom end of Malaysia’s income distribution spends a very high proportion of their income on food and housing,” he explained, adding that rising transportation and fuel prices have also increased spending pressure.

Record was speaking at a panel session entitled “Malaysia’s Economic Prospects and Challenges-Is the Worst Over? Is the Recovery Sustainable?” during the 20th Asian Strategy & Leadership Institute’s (ASLI) Malaysia Strategic Outlook Conference.

Socio-economic Research Centre (SERC) Executive Director Lee Heng Guie said at the session that based on household income expenditure between 2014 and 2016, it was noted that the Bottom 40 (B40) group could only afford a monthly net saving of RM54, while the Middle 40 manages to save some RM365 and Top 20 could afford RM820.

Thus, he said, any shocks to income will hit the B40 and M40 brackets the most, as their consumption account for 50% of total private consumption.

While cash handouts such as BR1M, according to Lee, do to an extent “help” these groups, a longer term solution. such as employment and higher income, is crucial to help them sustain their consumption.

He noted that Malaysia’s household debt still remains high, although there wa a marginal drop.

As at September 2017, Malaysia’s household debt was at 84.6% to the GDP.

Meanwhile, moderator of the session and ASLI Chairman Tan Sri Ramon Navaratnam noted that consumption is rising due to borrowings, which in turn has led to personal debt issues.

“This consumption generated growth cannot be sustainable. Consumption is rising because people without higher wages or income or disposable income are borrowing and that causes problem of personal debt which can be a source of instability,” said Ramon.

Uproar over crackdown on cryptocurrencies divides S.Korea

SEOUL: With a tech-savvy population quick to adopt the latest gadgets and a young generation facing dim prospects in the conventional workplace, South Korea has been a fertile ground for virtual currencies.

But the country's swift embrace of bitcoin and other cryptocurrencies has been met with an equally swift backlash by regulators, who have gone so far as to propose outright bans on trading.

With markets around the world watching, South Korea has become a fault line between a generation that sees cryptocurrencies as a way to a better life, and government officials who have likened the market to gambling and warned that it encourages illicit behaviour.

On Thursday the justice minister, Park Sang-ki, sent global bitcoin prices temporarily plummeting and virtual coin markets into turmoil when he said regulators were preparing legislation to halt cryptocurrency trading.

As of Friday, a petition on the website of the presidential Blue House had drawn more than 120,000 signatures opposing the move. Heavy internet traffic briefly crashed the site.

The online uprising against the government's plans puts President Moon Jae-in a tough spot, and his office was quick to say a ban is just one proposal under consideration.

“The latest idea to ban it all seems to have come out of a fear that when the bubble bursts and things go wrong, it will be all on the government,” said Yun Chang-hyun, an economics professor at University of Seoul.

With the youth unemployment rate three times the national average and a growing income gap between rich and poor, many young Koreans worry about their economic prospects.

“Tax it as much as you want but don’t shut it down. My life depends on it,” one petitioner wrote on the Blue House website.

Lee Min-kyung, a 25-year old student in a Seoul-based graduate school said she earned about 18 million won (US$16,973.93), double her initial investment in bitcoin. She said the government is showing haphazard responses simply because officials have “no idea.”

“They say the purpose of the regulation is to curb speculative moves, but it makes me just think the government simply doesn't understand what the market is,” Lee said.

More than 30% of 941 office workers surveyed in December by Saramin, a South Korea-based job portal, said they traded cryptocurrencies. The respondents had an average of 5.7 million won (US$5,357.14) invested in virtual currencies, and a majority of them said they began trading because they saw it as the fastest way to earn money.

That trend has earned critics on the street as well as in government offices.

Koh Young-sam, a 56-year old mechanic in Seoul, warned that the craze would collapse.

“Young people shouldn't be lured into this kind of scam. There is always something fishy about things that grow this fast,” Koh said.

South Korea is not alone in struggling to figure out how to tax and regulate online currencies, many of which are designed to provide anonymity for transactions.

In September last year, China cracked down on cryptocurrency trading, citing what officials saw as broader risks to the country's economy.

As South Korea accounts for about 15% of global bitcoin trading, according to the website, how regulators approach the issue will likely have international effects.

The local price of bitcoin in South Korea bounced back on Friday to 19.3 million won (US$17,481.20) from as low as 17.5 million won (US$16,445.82) according to Bithumb, the nation's second-largest cryptocurrency exchange. On the Luxembourg-based Bitstamp, bitcoin stood at US$13,709 after touching US$12,800 the prior day.

Park Chong-hoon, an economist at Standard Chartered Bank in Seoul, said, “South Koreans find it hard to deal with the jealousy from watching their neighbours getting rich fast.”

It is a sentiment echoed by many. Scepticism of “get-rich-quick” schemes among South Korean officials has coloured past forays by international finance into the country.

In the mid-2000s the U.S. private equity fund Lone Star faced raids of its offices and a years-long legal battle with the South Korean government after the foreign fund made millions of dollars buying and selling a controlling stake in a major South Korean bank.

That controversy, which raised concerns over South Korean money flowing to foreign entities, is probably among several factors making South Korea officials wary of managing the new breed of markets originated abroad, analysts said.

“In a practical sense, the South Korean government needs to factor in some political aspects “ if a growing number of people lose huge sums of money on bitcoin because of the government's failed attempts to rein in the frenzy, people will blame the government,” Lee Dong-gwi, a psychology professor at Yonsei University. “Simply put, the South Korean government could be afraid of the political hassles of being held accountable.” – Reuters