If Singapore falls into technical recession, what’s happening to the GDP % in Malaysia?

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Many friends in Malaysia have asked me if Malaysia is going to fall into a recession for 2019? They were worried about the effects of the US-China trade war. My answer has always been in the negative. The reason I say so was because Malaysia’s economy is quite a diversified one. The fact that we are still a developing nation also help because the domestic consumption will still be healthy as long as nothing exceptionally bad happens. Thus far, all forecasts for the Malaysian economy, whether by our Finance Minister Lim Guan Eng or by the International Monetary Fund (IMF) or the World Bank has indicated a positive GDP growth for 2019.

Well, due to the US-China trade war, it seems that our neighbour down south may just slip into a technical recession. On a yearly basis, the Singaporean government is still forecasting a positive growth of between 0 – 1%. Article in edgeprop.my here. AmBank Group Research expects Singapore’s gross domestic product (GDP) growth to slow down and to likely fall into ‘technical recession’, ie two quarters of negative growth. Its group chief economist Dr Anthony Dass said Singapore’s 2Q2019 GDP fell 3.3% quarter-on-quarter annualised. As Singapore is very reliant on foreign trade, he said,”Their complex integration in regional and global supply chains makes them vulnerable to a slowdown in world growth and tariff wars. We project the full year GDP to grow around 0.4% on the back of weaker manufacturing activities and weakness in trade will put a lid to services sector upside.” Article in edgeprop.my here.

By the way, even Ambank Research is still predicting Singapore to have a positive GDP for 2019 yeah. It’s just a technical recession and not a full-blown one. However, if we look at this as having some effects on the property market, then it’s definitely not a positive one. And if we look at this as the effects of the US-China trade war, then without any doubt the effects will be felt in Malaysia too. Remember yeah, Malaysia is put into the same watchlist as China; potential currency manipulator. Earlier article here: Same watchlist as China by the US government. So, can this be interpreted as a sign that the current slowdown in the property market to continue? Perhaps better translated to potential opportunity to buy instead? Happy understanding.

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written on 13 Aug 2019

<Featured Image is courtesy of Stock Photos from graja >

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