The outlook is grim you contingency say.
Underscoring a seriousness of a US debt-payment horror is a fact that as of July this year, Apple Incs nett operating money change of USD 76.4b distant outperformed a entire US as a nation. At a same time, a US, as a nation, had a nett operating money change of usually USD73.7b. (source: BBC report).
The US supervision debt is projected by S&P to strike eleven trillion this year, that would be equivalent to 75% of a gross made during home product or all a resources that a US manage to buy would generate this year. S&P also estimated a debt would increase to $14 trillion by 2015 as great as top $20 trillion by 2021, that during that indicate would mean that it will be 85 per cent of GDP.
In a grim postulation, S&P says in a worst-case scenario, US supervision debt could outstrip all a resources generated in a worlds largest manage to buy by 2021. (source: here).
With those kind of numbers, it was not startling during all that a US credit rating was downgraded a notch from AAA rating to AA+. (source: BBC report).
How do all these start us?
Back home, a numbers arent all rosy as well.
As of last year, a inhabitant debt was down from RM236.18b in 2008 to RM233.92b. (source: the Star report). That sounds great as it is upon a downward trend. However, an research of a unfamiliar debts as compared joined with a made during home borrowings as great as a commission in a increase of a debts as compared to a in! crease i n a GDP over several years pai! nts a re fan worrying picture. See a research here.
The points have been these:
What a upon top of means is that you have been borrowing faster than you have been producing income.
According to a US Census Bureau, between a months of Jan to May this year, a US exports to Malaysia totals USD6.1b whilst a exports have been value USD10.5b. The US Department of State's website shows that he United States is Malaysia's third-largest trade partner as great as Malaysia is a eighteenth-largest trade partner of a United States with annual two-way trade amounting to $33b.
The United States is a largest unfamiliar financier in Malaysia upon a cumulative basis, as great as was a largest source of brand new unfamiliar approach investment in Malaysia in 2010 with approach investment in a manufacturing zone in Malaysia as of year-end 2009 of $15.1 billion, with billions of dollars in one some-more investment in a oil as great as gas as great as financial services sectors of a economy.
Such is a importance of a US to Malaysia. It goes though observant that a US in financial bad shape would fundamentally next to to a Malaysia in mercantile doldrums.
Meanwhile, Malaysias Economic Transformation Program (ETP), an desirous devise to convert a! nation in to a fully developed republic by 2020 remains critically linked to unfamiliar investment. The ETP requires annual for! eign inv estment in a operation of $11 billion to account a entertain of a due projects. However, normal annual investment since 1997 has usually been $3.1 billion.
A Mar 2011 report by Bank of America Merrill Lynch ranked Malaysia a second slightest popular market after Colombia among tellurian taking flight market account managers. Malaysia, thus, is in no in front of to devise a design of chaos as great as intrusion to a investors from outside.
In addition, new great good known events, a sum of that have been all as great familiar to many, if not all of us, do not attraction Malaysia as great good to unfamiliar investors notwithstanding eager efforts by a supervision to capture them.
Yesterday, Goldman Sachs revised a GDP foresee for this year from 5.4% to 5% with a identical cut of 0.4% next year from 5.6%. (source: the Malaysian Insider report).
Considering a state of a US manage to buy as great as a burgeoning debts, a US supervision might only increase seductiveness rates in sequence to lessen public spending; levy higher import duties upon sure goods; levy a little strict import conditions as great as broaden a protectionism process over a little industries.
The increase in seductiveness rates would shorten money outflows as great as investment activities thereby ensuing in diminution of consumer spending as great as imports by a US. This is firm to adversely start a exports to a US. Standing during USD33b a year, a 10% diminution in a exports to a US would mean a snatch of USD3.3b from a liquidity. you consternation how most commercial operation would overlay up as great as how most jobs will be lost in such situation.
Added to that a severely weakened US dollar as against to a Ringgit, things would not look ! as great splendid for a exporters as they remove competitiveness in conditions of currency exchange. Perhaps you should take a serious re-look during a growth process as great as compensate sufficient courtesy to a areas in that you have been strong and! not for getting a traditional bread as great as butter, namely, a rural sector. Modern as great as to illustrate efficient food production might be a great option as well.
The supervision contingency come up with a devise to counter a US meltdown as great as a Europe meltdown that is fast forthcoming as soon as possible. failure to do so would only exacerbate a current economics hiccups that you have been facing.
Locally, vital costs have been sharpening newly as acceleration rises. As of June this year, it was 3.5% nonetheless realistically, a people upon a streets have been feeling a pinch a lot more.
In sequence to assuage a pang of a people who have been finding it tough to cope with a taking flight in a costs of living, a supervision yesterday announced a half-month bonus to a 1.3 million polite servants as great as a sum of RM500 to each pensioner.
The goal was good. Our Honourable Prime Minister was reportedly observant a reward remuneration can lighten a burden... for a arriving Aidil Fitri celebration.
I am happy for a polite servants. The sum compensate out is RM2b. However, in my common opinion that compensate out would do little, if not nothing, to solve a complaint during hand, generally a complaint of a taking flight costs of living.
Can you all suppose a sum total of RM2b being outlayed in a next 10 days or so? How does that help in conditions of controlling spiralling prices as great as inflation? In fact, utterly to a contrary, this 2b one some-more spending inside of such a reduced camber of time would usually offer as inflationary factor.
I could be wrong as you am not an economist. But you have been against to stop-gap measures for a prolonged time.
To me, all problems, generally inhabitant problems, will have to be met with a holistic solution. Stop-gap measures look great for a while, until some-more as great as some-more gaps appear in a destiny as great as you would run out of plugs to plug those gaps.
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