Thursday, March 12, 2015

WHY INFLATION DRIVEN GDP GROWTH IS POSITIVE FOR MALAYSIA? ---By Shan Saeed I hope after Govorner Dr. Zeti Aziz conference, economic experts in malaysia can understand what she actually means that Ringitt is undervalued and how exporters can benefit from depreciating ringitt. I admire and respect the woman for her economic thoughts. She is very suave and smart woman. I am still relatively bullish on the Malaysian economy based on my solid market based intelligence gathering in the last 3 years. Some experts might have different economic thoughts based on their financial analysis. The policy levers especially monetary and fiscal policies are working well for the country with confidence as the key driver which is keeping the GDP growth 6% on the upsurge. Inflation driven growth is the new agenda for the policy / decision makers to keep the growth trajectory moving as we navigate through treacherous times. All credit goes to Governor Dr Zeti Aziz for playing the monetary policy in a strategic manner despite exogenous factors dragging various global economies down in the modern day of financial repression. If I were to analyze few key variables of the Balance Sheet of the Malaysian Government, here would be the key statistics on Dec 31, 2014 to share with my valued readers. 1. GDP growth: 6% 2. Inflation rate: 2.7% 3. Foreign Reserves: $116 billion 4. Fiscal Deficit: 3.5% 5. Debt to GDP ratio 55% 6. Economic Confidence: High 7. Current account: Surplus 8. Domestic demand: Strong 9. Unemployment rate 3% 10. Political Stability Yes 11. Financial Stability Yes 12. Investment climate: Favorable Sources: Bank Negara Malaysia, Independent Sources, Market Intelligence, Economist, World Bank, IMF, ADB, Financial Times. There is a strong correlation of economic confidence in those countries whereby GDP growth is higher than fiscal deficit or inflation rate, economies are witnessing growth trajectory in a structured manner. Looking at the economic performance of the Malaysian government in the current environment, it clearly illustrates why her economic growth is in a healthy mode and economic confidence is running high because GDP rate 6% is higher than fiscal deficit 3.5% / inflation rate 2.7% of the Malaysian government. Government looks totally committed in providing level playing field to all players in the market, demonstrating fiscal brinkmanship in reducing the deficit, controlling the Debt to GDP ratio well under 60% and above all keeping the economic confidence in the economy which is currently lacking in many EU-28 countries and even Japan. REAL ESTATE MARKET IN MALAYSIA----The winning horse Investors are still interested in buying properties around KL and Penang because of few good reasons 1. Economic confidence 2. Political stability 3. Financial stability 4. Life-style stability 5. Infra-structure stability 6. Freehold status 7. International significance These above mentioned reasons make it fairly attractive for foreigners and local to take position in REAL ESTATE MARKET to derive long run benefits. GST come or go, smart investors will continue to buy property for WEALTH PROTECTION in these turbulent times.