NIK ZAFRI'S (HUMBLE) ASIA/SEA ECONOMICAL FORECAST 2009

Many have forecasted that SEA will be the first to rebound from the current economic crisis by September, 2009.

On the other hand, what saddens me most is that some even forecasted that Asian economy will fall badly in 2009 - such a pathetic statement meant to discourage us.
In the past, we have been known for the reputation of outperforming the US and Europe due to the right planning and eventually become very immune to any credit crunch from the West.

Some countries are not even depending on IMF or World Bank in 1997-1998-remember? Even China has been too much underestimated (not that I disagree but too much 'smart' speculations..come on) by these 'so-called' economic forecasters.

I have always been known as a 'reverse psychological' person. I don't believe in 'too obvious bad news' being reported meant to lure the small investors away but giving great monetary advantages to speculators.

Based on these 'unfounded fears', I feel strongly that the Asian will be one of the key players in the world economy commencing from 2009.

But of course, I have a different theory (especially for Malaysia) - I think it's earlier than that...say April, 2009?

But, I share the agreement that it is likely going to be Singapore then probably followed by Malaysia. There have been a trend of banking and financial institutions in these two neighbouring countries offering new packages to GLCs and MNCs. These efforts would probably contribute to economy recovery in 2009. There has also been a higher demand for exports from Malaysia and Singapore based on the increased spending in the Euro and US.

The banking sectors in Japan are planning to buy securities, stocks and bonds (corporate) etc - and if these plan works, it will help stabilise their financial market. The Government has announce Japan's biggest ever annual budget Y12,000bn.

China however would still have to be put under alert - to grow or not to grow. Since China are trading with other SEA countries, their ability to export surplus stocks financed on credit should be monitored. New policies to boost consumption need to be drawn up to counter this possibility. I do know that China works very-very hard lately not to be bound to 'intelligent economic comments' e.g. decoupling - and I have every confident that they will succeed.

In Indonesia, the President announce the budget of USD200 billion ++ and a 6.2% growth is expected. However, they are not too sure about the outcome of issuance of Government bonds and probably there will be a budget deficit of nearly 2% GDP. Mainly taxes will play a role for the main revenue followed by non-tax sectors. There will also be about 102 trillion rupiah for fuel subsidy.

The only biggest dillema in Indonesia is corruption - if this is not being minimized, I do not think that they can reach the target that they are hoping for. While for the good part that Indonesia has done right is their achievement of regaining self-sufficiency in rice where the production has surpassed the country's rice consumption. This has made them better in terms of food situation and probably would take them out of the current global food crisis.

For Korea, they are not too ambitious; which I find a good thing to do - be cautious. While everyone is hoping and praying for a 2009 turnaround, Korea predicted a 3% growth and the focus is mainly creating new job opportunity. They have also cut taxes here and there.

Korean consumer price is estimated to stabilize to less than 4% and there may also be decreasing service deficitit and rising goods surplus - thus making 2009 account surplus to exceed USD10 billion. I personally think that Korea should now put an effort to minimize their dependency on IMF as what they have done before in 1997.

I will keep you all updated.

GLOBAL COMPETITIVENESS

This year’s Global Competitiveness Report is being released at a time of multiple shocks to the global economy. The subprime mortgage crisis and the ensuing credit crunch, combined with rising inflation worldwide and the consequent slowdown in demand in many advanced economies, has engendered significant uncertainty about the short-term outlook for the world economy. Global growth is slowing, and it is not yet clear when the effects of the present crisis will subside.

The financial market crisis that began in early 2007 is almost unprecedented in its impact, having resulted not only in losses in markets and for financial institutions, but also in an erosion of public confidence in the financial sector and among the institutions themselves across the industrialized world. In the meantime, rising energy and commodity prices are having a dual effect on emerging and developing economies: on the one hand, boosting growth; on the other hand creating inflationary pressures that raise the basic cost of living, thus increasing poverty levels. More generally, although the present slowdown was originally expected to be confined mainly to the United States, it is now spreading to other industrialized economies and it is not yet clear what the future will bring for emerging markets.

Policymakers are presently struggling with ways of managing these multiple shocks intelligently while preparing their economies to perform well in an economic landscape characterized by growing volatility. In an unstable global financial environment, it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development.The World Economic Forum has for the past 30 years played a facilitating role in this process, by providing detailed assessments of the productive potential of nations worldwide.The Report is a contribution to enhancing our understanding of the key factors determining economic growth, and explaining why some countries are much more successful than others in raising income levels and opportunities for their respectivepopulations, offering policymakers and business leaders an important tool in the formulation of improved economic policies and institutional reforms.

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