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Spending down. GDP growth slows. 2020.

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One major reason why it’s important to have a positive sentiment is because people are willing to spend more of their money. Not too much but continuous moderate spending. When situation’s becoming negative, they tend to save their money instead of spending it. This is when the economy weakens and the GDP growth slows. In order to push the growth up again without support from household consumption?

The government will have to take a pro-active role. For example? Continue big infrastructure projects so that all the supporting industry to the construction industry will also grow. That’s what people call as stimulus. However, for the Malaysian government to push growth by spending more, they will need to borrow more. This will not be good for the long term yeah. Whatever borrowed has to be repaid…

Article in edgemarkets.com Institute of Chartered Accountants in England and Wales (ICAEW) says that it expects Malaysia’s gross domestic product (GDP) to slow from 4.4% in 2019 to 4% in 2020. (4% meant that ICAEW’s forecast is the lowest that I have read thus far) The major reason is because the household spending is likely to slow down in 2020.

ICAEW economic advisor Sian Fenner said, “Behind this reasoning is that householding spending, which has been the key engine of growth, will actually start to moderate. It’s still going to remain quite healthy, but we’re not expecting growth at the level that we’ve been experiencing.”

With regards to monetary policies for 2020, it said, “While the US Federal Reserve signalled a pause in November, we still expect it to reduce rates once more in March 2020. Regional central banks are also set to maintain an accommodative bias in their policies.”

“This provides a window for Bank Negara Malaysia (BNM) to adjust rates lower, without excessive pressure on the ringgit. Following the recent 50bp cut in the Statutory Reserve Requirement, we expect the BNM to reduce the policy rate by 25bp in Q1, 2020, bringing the policy rate to 2.75%.” Please do refer here for the full Article in edgemarkets.com

Please read through all the comments and understand that the message is a positive one. At worst, a neutral one. It is not predicting a recession for example. It’s predicting a GDP growth of 4% yeah and this is as healthy as it could get under the trade war circumstances as well as the fact the world economy is also not positive. By the way, I remain a supporter for GST instead of SST. Will always be hoping that the best decision prevails for the sake of Malaysia. It does not need to be there forever. So, please remember, there are no forecasts on Malaysia slipping into recession in 2020. Lowest forecast for GDP growth is 4%. As for all the rest, please refer to earlier article here: Prediction for GDP growth for Malaysia in 2020 Happy buying yeah.

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