Someone asked this the other day. Is Malaysia going into a recession. Before I answer, may I ask what is recession? According to Investopedia, “The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP)” In very brief, there must be two consecutive quarters or negative growth for a country to fall into technical recession. Currently, all three major international rating agencies still rated Malaysia under the ‘investment grade’ category and no analyst or economist has yet predicted that Malaysia would hit negative growth for 2015. So, easiest answer is, NO.
Some other recent analysts prediction. According to Krystal Tan an Asian economist at Capital economics, “Overall, we think GDP growth will slow to around 5.0 percent this year and 4.5 percent in 2016, reflecting fiscal consolidation, soft commodity prices and slower credit growth.” On a more negative note, Fitch Ratings said that Malaysia’s ‘A-‘ rating with a “negative” outlook reflects pressure on the sovereign’s credit profile. Main issue is the weakening macro fundamentals due to a widening savings investment gap. Fortunately the rating is balanced by reasonably strong growth rates and an external solvency position that is still strong.
In the future, there’s always the possibility of Malaysia going into a recession. Based on the current and recent numbers however, many countries would have to swing into the negative territory first before Malaysia. Thus, there are still time to prepare if you really ‘wish’ that Malaysia can go into another recession. Based on the current demographics until before we become an ageing nation, the growth would continue. Property investment remain viable unless all the cheaper secondary and the less favourable areas of today suddenly become hotspots as well and prices went spiralling up again. There are already many stocks which are undervalued and prices went down simply because of sentiment and not because of company performance. Come on, beyond those ‘useless’ negative news which would never help you in your investment anyway, why not read and understand about where you may invest to better help you retire earlier or give your loved ones a better future. It’s time to work harder again. Question is, are you prepared and ready.
written on 23 June 2015
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