A Horizon of Gray Clouds for 2009

This is the latest BERNAMA Report on the Malaysian economy and projection for 2010. Are we still looking for that silver lining as gray clouds are still predicted by the World Bank?

This is the Report dated Nov 4.

Malaysia's near-term outlook shows a slow process of recovery, with real GDP projected to contract 2.3 per cent this year before growing by 4.1 per cent next year, the World Bank said in its latest update.

In its half-yearly assessment of the economic health of East Asia and Pacific region released today, it said the revised projection showed lower growth compared to -1.0 forecast in April.

It said consumption and fixed investment growth would remain relatively subdued due to uncertainties on the global outlook, efforts of fiscal consolidation and still low levels of capacity utilisation.

The turnaround in the inventory cycle is expected to be the main growth driver, it said, adding that import growth would continue to outpace export growth in the coming quarters, resulting in a smaller trade surplus.

The current account balance is expected to decline to 12.3 per cent of the GDP this year and further to 12.1 per cent next year.

The update titled "Transforming the Rebound into Recovery" said large and timely fiscal stimulus spending in most East Asian and Pacific countries led by China and South Korea, along with a powerful inventory restocking process now under way, have driven the rebound in the region and contributed significantly to confidence in a global pick-up.

Developments in the region remain strongly influenced by China as the projected GDP increase this year will offset three quarters of decline in the GDP of the United States, the Eurozone and Japan.

With the projected 8.4 per cent growth in China this year and the country’s domestic demand racing ahead global demand, countries exporting consumer durables, electronic components and raw materials to China have felt the positive flow-on effects.

As a result, the World Bank is projecting 6.7 per cent growth this year for developing East Asia and the Pacific and 7.8 per cent next year.

Though Indonesia and Vietnam were performing well, East Asia, excluding China, is expected to grow at around one per cent this year. More slowly than South Asia, Middle East and North Africa and only slightly stronger than Sub-Saharan Africa.
Some countries remain hard hit, with the GDP of Cambodia, Malaysia and Thailand contracting and barely growing in Mongolia and some of the Pacific Islands, the report said.

The World Bank said Thailand’s economy is expected to shrink by 2.7 per cent this year before expanding by about 3.5 per cent next year if political stability continues in the country.

Crystal balling continues to see a slow gradual return of the Malaysian economy this year, with GDP figures still lurking in negative territory. 2010 sees greater promise.

So are are you betting on the stock market? Look for some good stocks, buy them and wait. I do not think you would lose.