Sunday, July 16, 2006

If Malaysia's Economy Is In Great Shape, Why Are The People Complaining... Suffering?

I propose we take a second look at claims that our economy is doing well.

One assumes that the government is sincere in reassuring us that the country's economy is doing fine, what with the GDP being quoted at potentially achieving anywhere between 5.3% and 5.6%. This was even made subject of editorials by Wong Chun Wai and other stalwarts of the Pak Lah governments' handling of the economy. However, some observations can be made:

1 - People are grousing about an increase in the cost of goods. Some pooh-pooh this as being due to abuse by traders taking advantage of the increase in the retail price of fuel due to the government's 30 sen subsidy cut earlier this year - hard to believe that ALL Malaysian traders are like this, so an unlikely complete reason.

Nevertheless, whatever the underlying reason, the inflation is real, quoted as anywhere between 3.9% to 4.5% over the course of the year.

So, even if the GDP growth is sustained at the level quoted, with inflation included, our real growth appears to be more ~ 0.8-1.7% this year, far worse than at any time since the late 90's Asia crisis.

Maybe my stats are wrong here coming from a humble non-Oxbridge Engineering degree holder, but the above scares me as as 0.5% is usually seen as statistical noise, we appear to be on the brink of...

2 - Unemployment, including graduate unemployment, is at a scale unseen of in the country since I ever bothered about these things (I graduated in 1997). Again, some are pooh-poohing our graduates as being ill-prepared and ill-educated, but in the past, there were always outlets for these individuals through general trading, tradesmanship and skilled profession entry points via public and private sector projects, both mini and mega.

And the above doesn't explain high unemployment in general; i.e. including non-grads. It also did not explain and continues to struggle to explain how our foreign worker shortage ended up being a foreign worker glut in such a short space of time, leading to crime, etc. How did the foreign labour employment market contract so drastically in our 'growing economy'?

3 - 1-2% growth is still growth. However, why are there grouses from the people that they are not feeling growth but feeling a need to tighten their belts or contract their individual or family 'economies'? Is it to do with the distribution of this growth in wealth? Is it possible that only some are experiencing a growing economy when a vast majority of the people aren't?

If the observation of some foreign analysts is true, that Malaysia's growth now is too export driven and has no strong domestic element, maybe then this is why the people are not gaining, only the exporters are and are unwilling or unable to channel it back to domestic growth?

Or could it be more insidious, that a select few are getting richer at the expense of the many in the domestic economy, taking away the strength of turn-over in the domestic economy that only the many can generate? Any rich guys getting richer seen about town lately?

Just some observations... comments?

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