Wednesday, December 3, 2008

5% 2008 GDP growth = sharp slowdown in 4Q08

“Malaysia to hit 5% economic growth, says Najib,” reported The Edge Financial Daily yesterday (2 Dec). Datuk Seri Najib Razak was commenting on 2008 GDP growth.

That full year number is irrelevant – it is heavily influenced by the record oil prices and benign global economy earlier this year. The pertinent figure is what’s happening currently. And going by our Finance Minister’s 5% number, it’s not looking good.

GDP growth was over 6% for the 9 months up to Sept 08 (9M08). Now we’re told it’ll be 5% for the full year. Simple maths tells us this suggests just 1.2% growth for the last 3 months of the year (4Q08) – a very sharp slowdown!

Our GDP growth has been decelerating:
1Q08: 7.4%
2Q08: 6.7%
3Q08: 4.7%
4Q08: 1.2%?

The BN government targets 3.5% growth in 2009. Against this backdrop, do you think that’s achievable? I take no pleasure in bearing bad news. But pretending things are fine will not help us. The crunch will be much worse when it hits if we are unprepared. The sooner we accept reality and the faster we take remedial measures the higher the chances for us to alleviate some of the pain.

PS: I'll be participating at "The New Economic Vision for Penang and Malaysia" conference at the Traders Hotel this Friday and Saturday. My panel slot at 2pm Friday is on "Moving up the Value Added Ladder." And after hours I look forward to the Jazz Festival and Alleycats!


Chin Gian said...

How exactly is it that you got 1.2 % average for the past three months, sir?

Chi-Chang said...

It is maths. If first 9 months growth was 6%+ and 12 months is only 5%, the last 3 months of the year must be very, very slow.