Malaysia Entering Recession ?

MALAYSIA is entering a recession, if it is not in one already, head of RHB Research Lim Chee Sing said. He predicts the economy to shrink 1.5 per cent this year, or possibly worse, depending on the state of development in the US and other bigger economies in the world. At this rate, the recession seems set to be sharper than that in 1985 when gross domestic product (GDP) shrank by 1.2 per cent, but milder than the 7.4 per cent contraction in 1998.

"Depending on the definition you use, Malaysia is already in recession, or perhaps, is entering a recession," Lim told reporters during a discussion on the stock market in Kuala Lumpur yesterday.

A recession is commonly defined as a decline in the GDP for two or more consecutive quarters. But this definition is unpopular with many economists since it does not take into consideration changes in other variables such as jobless rate or consumer confidence.

"Malaysia's export has contracted for the third month, each time getting sharper. The industry production index has also fallen for three months, and at 15 per cent, it's even worse than the fall in October 1998," Lim said. He is the latest in a growing group of private sector economists and research houses forecasting a domestic recession this year. US bank Citigroup this week slashed Malaysia's economic forecast to a 1.5 per cent contraction, while Nomura Holdings Inc had predicted a 4 per cent fall this year.

Article from Business Times.com