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Negative GDP growth of 2.7pct? Can this be positive news?

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Yeah, Malaysia’s Q3 showed a negative GDP growth. Let’s talk about that shortly. I am very sure many thinks this is very negative?

We see what we want to see, really

When we scroll through our Facebook and we click on some news which was forwarded by our friends and those news were all negative news, very soon, Facebook will show more of those for you. This is because higher engagement is a super important metric and relevance happened to be that trigger for engagement. When we click a new car launch news, soon we will see more new car launch related news. This is the same for POLITICS too. What we believe is what we always see and this meant that our belief grows stronger, whether or not there are changes to the other side which we did not read.

News about the negative GDP growth

Take a look at the below about the Q3 GDP growth for Malaysia which happened to be a negative number. There are news article titles which look neutral; just stating the fact. However fact here; contraction has a negative connotation yeah. There are positive ones showing that this contraction is getting smaller. Another shows the news as positive because this number actually showed a rebound! Well, there are even one which used negative titles! Anyway, just wanted to show to you that generally we prefer to read negative news. The media has to write things which we like to read yeah.

negative GDP growth

Is the Q3 negative GDP growth really considered a negative news?

My personal view is that if this is already showing a recovery or in this case considered a rebound since it was negative 17% in Q2 2020 to negative 2.7% in Q3 2020, then this is good news. The catch is however that we have the CMCO restarted in October and this has since been expanded to nearly all states in Malaysia and extended till December 2020. Would our number show a very small positive in Q4 2020?

Since many are saying no, so I will be a contrarian and say that because most businesses are still allowed to operate, we should see a small positive Q4 GDP growth. We will see yeah. For our sake, I do think it’s better for my prediction to be coming true.

What’s coming in 2021 then?

Many continue to question if we are on the right track. Well, our current Finance Minister is really pretty qualified and having the necessary experience too. Bank Negara Malaysia (BNM) has also decided not to reduce the rates any further pending a further assessment of the economy. This is a good sign by the way. Anyway, these are the following predictions / forecast by external agencies. Means those which I think it’s not possible for us to FORCE them to say good things about us unless they wanted to.

IMF says our GDP for 2021 is likely to be 7.8% (click to for the article)

World Bank says our GDP will be positive 6.3% for 2021. (click here for the article)

Fitch Solutions says our GDP will be positive 6.32% for 2021. (click here for the article)

Moody’s say 7% growth for 2021. S&P says 8.4% for 2021. (click here for the article)

What if I was wrong and 2021 really showed a negative GDP growth again?

By the way, the ONLY truth which we could safely claim would be to look back at what has happened. This has been true and many economists with much higher credentials have predicted wrongly many times and that one time they predicted right, they told the world… Even here in Malaysia, we have many predictions about how the property market should have crashed since 2014. Do go and google for it yeah. Will not share here.

Yesterday, I had a cup of coffee with an accountant and she said, “I think 2021 is going to be another negative year. Just have to see how bad is it.” She may be right. I may also be right. Just remember, keep ensuring that our income stream is positive and find opportunities to inves to get good returns. This need to happen no matter which prediction comes true. Happy doing what you think is right. In the mean time, read both sides of the story and your social media will start showing you news from BOTH sides. Skew to one side and very soon you have just one perspective.

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Next suggested article: Do not worry? GDP contracted by 17% in Q2 2020

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