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Author: savemalaysia   |   Latest post: Thu, 23 May 2019, 9:06 AM


Recession not on horizon, deputy trade minister assures Malaysians

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KUALA LUMPUR, Jan 6 — Malaysia will not fall into recession despite the gloomy economic forecast by analysts, Ong Kian Ming asserted today.

The deputy international trade and industry minister said Malaysia won’t be able to escape some negative effects of the slowing global economy caused by uncertainty over the continuing US-China trade war and possibility of rate hikes, but stressed the local economy will not “crash and burn” this year.

"A recession is nowhere on the horizon for the Malaysian economy,” he said in a statement.

He noted that the World Trade Organisation (WTO) has scaled down its growth forecast to 3.7 per cent from 4.0 per cent while the 36-member countries in the Organisation for Economic Co-operation and Development (OECD) have trimmed the global growth rate from 3.7 per cent to 3.5 per cent for this year.

Ong, however, urged Malaysians “not to panic” without understanding the economic and financial figures cited by analysts.

To support his argument, he cited an analysis of the Nikkei Malaysia Manufacturing Purchasing Manager’s Index (PMI), a leading indicator of economic activity in the manufacturing sector.

He noted that the PMI dropped to 46.8 in December 2018, but pointed out that in the first half of last year, there was no significant decrease in manufacturing output and value.

On the contrary, he said the overall trend in the value of manufacturing sales domestically showed a healthy increase from RM67.8 billion in January to RM73.1 billion in October, an increase of 7.8 per cent.

Based on a year-on-year comparison for the same monthly period last year and in 2017, he said there was no significant slowdown in manufacturing sales despite the slide in PMI numbers.

“The challenge with depending too much on the Manufacturing PMI is that it is a business survey and the correlation with actual output may be weak. 

“One could easily point to other business surveys which shows a more positive outlook for 2019,” he said.

He then said businesses are confident of an improvement by March this year, citing Business Tendency Survey results for the fourth quarter of last year, with the exception of the construction sector.

Ong also said total trade from January to November last year rose to RM1.72 trillion from RM1.62 trillion over the same time period in 2017, pointing out that it was higher than the projected 5.0 per cent target.

He added that exports also rose for the same year-on-year duration last year to RM914 billion from RM855 billion in 2017, while the total balance of trade surplus in the first 11 months of last year increased to RM109.6 billion compared to RM91.1 billion during the same time period in 2017.

“It is important to note that the GDP figures for the manufacturing and services sector, which comprises almost 80 per cent of the economy, are still registering healthy growth in all three quarters of 2018,” he said.

Ong then pointed to data by the Department of Statistics that showed employment grew at a rate of 1.8 per cent between January and October last year while unemployment remained at a constant 3.3 per cent.


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