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Malaysia Set For U-Shaped Recovery?

The global economy is not quite out of the woods, but the good news is the worst is over. Backdrop of improving global economic data, Asia is expected to recover faster than the industrialized world.
They are some research house project a V-shaped recovery for Asia and I think V-shaped recovery likely to happen on China and India but for Malaysia, U-shaped is likely to happen after China and India recovery from crisis.

China and Singapore are among the top trading partners of Malaysia, the expansion in their PMI (Purchasing Managers Index) will spur demand for Malaysia's manufactured goods so with a V-shaped recovery from their, Malaysia will recover U-shaped. Be that as it may, domestic demand will still be the driver of Malaysia's gross domestic product (GDP) growth in the months ahead. Malaysia economy is expected to grow +1.3% in 4Q2009, but not enough to prevent the economy from contracting -3% this year before growing at +3.5% in 2010 said by CIMB

Going forward, the performance of the Malaysia economy hinges on political stability and a continued pace of economic reform to make the country competitive and attractive location for foreign investors. History has shown that economies that slip into a deep recession will rebound just as sharply as was the case in 1998 when the Malaysia economy contracted 8% and bounced back 5.4% in 1999, with the last quarter growing 10.6% y-o-y.

U-shaped recovery can still happen in Malaysia for several factors
  1. Asia now has China and India ( and to a certain extent Indonesia) to offset slackening export demand from Europe and US.
  2. Asian governments have all put in place aggressive stimulus packages which are beginning to take effect.
  3. Asian policymakers have begun to focus on boosting domestic demand since 1998 and last but not least, the developed world is already showing signs of recovery, thanks to aggressive fiscal stimulus actions.


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