Category: Economics

Categories
Economics

[1167] Of a fall of 0.2% or 7.2%?

An article by Bernama highlights that the Malaysian industrial production index falls 0.2%:

KUALA LUMPUR, April 9 (Bernama) — The Industrial Production Index (IPI) for February 2007 fell 0.2 per cent to 123.0 compared with 123.2 in February last year. [February Industrial Production Index Down 0.2 Pct. Bernama. April 9 2007]

While true, the magnitude of drop from the previous month is actually 7.2%:

Compared with the index of 132.5 in January 2007, the IPI for February 2007 dropped 7.2 per cent. [February Industrial Production Index Down 0.2 Pct. Bernama. April 9 2007]

Is this bad news?

Without more information, I cannot really say. From the look of it, through limited data, it seems like seasonal fluctuation and nothing more though. I however am tempted to link the decrease to the fall in demand for electronics in the US.

Regardless, this is how the index looks like at the Department of Statistics of Malaysia:

By the Department of Statistics of Malaysia. Public domain?

What do you think?

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

p/s — okay. I forgot about seasonal adjustment. Now, I am embarrassed.

Categories
Economics Society

[1166] Of wanna work in the US?

Well, bad news:

On the day after it began receiving applications for H-1B work visas, the US Citizenship and Immigration Service reported yesterday it had already received more than double the number of applications it is permitted by law to grant for 2008. The same limit took two months to reach last year.

While H-1B grants are officially capped at 65,000, USCIS reported receiving over 150,000 applications as of Monday afternoon. [H-1B Visa Limits Hit After Only 1 Day. Scott M. Fulton, III, BetaNews. April 4 2007]

Hat tip to Jiinjoo.

Categories
Economics

[1163] Of blog war between DeLong, The Street Light and Free Debate

Economists are taking sides. It starts at The Economist:

Despite a dispiriting start that saw the imposition of steel tariffs, the Bush administration has made great efforts on trade, pushing forward with both multilateral and bilateral deals. Its biggest goal, a substantive deal from the Doha round of World Trade Organisation negotiations, is currently on life support. But the administration has managed to secure a variety of smaller deals, while letting steel tariffs die a death at the hands of the WTO. Now even progress of that sort may end. [Trouble with trade. April 2 2007. The Economist]

The Street Light fires the first shot:

The Economist takes a massive dive today, as they continue to bizarrely and irresponsibly assume the best (or maybe “the least bad” would be more accurate) of the Bush administration. [The Economist on Bush on Trade. April 2 2007. The Street Light.]

The DeLong as reinforcement:

Kash Mansouri writes… [Kash Mansouri Is Very Unhappy with the Economist on Bush on Trade. April 3 2007. Grasping Reality with Both Hands]

Free Debate, the blog of the Economist, counterattacks:

BRAD DE LONG approvingly links Kash Mansouri, as he goes after us for claiming that the Bush administration has been relatively strong on free trade issues…

[…]

Despite the good professor’s endorsement, this take on the Bush administration’s trade policy is an implausibly uncharitable reading. I confess I am stonkered at the willingness to blame the Bush administration for being insufficiently active on Doha, since without the trade team’s efforts, Doha would not be on life support; it would be dead. The Bush administration did everything but a fan dance to lure all parties back to the table after the catastrophe at Cancun, and while it has not gone as far on farm subsidies as anyone would like, this is widely regarded as driven by (Democratic and Republican) farm interests in Congress, not some failure on the administration’s part. It does the administration no good to negotiate a treaty that can’t be signed.

[…]

The Bush administration is far from perfect on trade; I think particularly of its ridiculous stance on sugar ethanol. But the Bush administration is constrained by political realities. It has failed to take many damaging steps despite intense political pressure, such as declaring China a currency manipulator, and where it does impose anti-trade measures, they are pleasingly often something like the steel tariffs, which were guaranteed to be overruled by the WTO. And as Mr DeLong’s commenters point out, whatever Mr Bush’s trade sins, they are at this point thoroughly overshadowed by the Democratic protectionists currently flexing their muscles in the House. That’s less an endorsement of the Bush administration than a sad comment on the state of trade policy in the world today: the Bush administration is the best we’ve got. [Tu quoque. April 3 2007. Free Debate]

Would Mankiw and Krugman (or heh, by proxy, Mark Thoma) get a keg and make a merrier party?

Categories
Economics

[1161] Of why Malaysia is the center of Islamic banking

From the Wall Street Journal, via the Free Debate at the Economist:

Six years ago, a Malaysian bank asked 80 financial institutions in the Persian Gulf for help in selling a corporate bond that complied with Islamic prohibitions on interest.

All but one declined to participate, branding the novel security “haram,” or banned by Islam. Just a few months after the $150 million offering proved a success, however, many of these doubters shelved their theological qualms and came up with similar Islamic bonds of their own.

The global Islamic bond market that has developed since then is now worth an estimated $50 billion in securities outstanding, part of a burgeoning Islamic financial industry that’s fast approaching $1 trillion in assets. The torrents of cash that fuel this boom mostly come from the Persian Gulf’s oil bonanza. But it is distant Malaysia, thousands of miles to the east, that has emerged as the industry’s unlikely trailblazer.

“Malaysia is the catalyst for change,” says Faiz Azmi, Kuala Lumpur-based global head of Islamic finance at PricewaterhouseCoopers, the accounting and consulting firm. Much of what is now considered conventional in the industry, he explains, was test-driven here first — often against the objections of conservative clerics in places like Saudi Arabia. Now such innovations are not just commonplace in the Gulf, but also have become an important revenue source for Western financial giants with Islamic-banking divisions, such as Citigroup Inc. and HSBC Holdings PLC. [Malaysia Transforms Rules For Finance Under Islam. Wall Street Journal. April 4 2007]

I remember religious conservatives claiming that the stock market is haram as well.

Categories
Economics

[1160] Of why the Chinese economy will not be Malaysia’s savior in 2007

For those that read this blog, perhaps you have taken notice that I expect the Malaysian economy to take a dent this year. This is based on expectations that the US economy might experience an economy slowdown later in this year. With a slowdown in the US, demand for Malaysian goods in the US should go down. With worrying data on sub-prime mortgages, I do think the probability is little bit higher than otherwise. There are those that disagree with that prediction. One of the reasons cited to rebuke my prediction is the booming Chinese economy. I would like to prove how the Chinese economy, while important to the Malaysian export sector, is not as nearly as important as the US market.

Firstly, in 2006, the worth of Malaysian export to the US was approximately RM111 billion (roughly, USD32 billion). At the same time, export to the People’s Republic of China was less than half of that to the US. It stood at RM43 billion (roughly, USD12 billion). While the amount going to the Chinese market could increase — it increased by about 21% from 2005 — I do not think it is rational to expect the Chinese economy to be as important as the US market in 2007. Further, the given the size of the US economy, if a slowdown does occur, I do not think the Chinese economy will be able to cushion the entire fall in US demands for Malaysian goods. If the Chinese would to become our savior, each dollar fall in export to the US market needs to be compensated by a dollar worth of export to China or more, with all else being equal, of course.

Secondly, the argument that booming Chinese economy will prevent a slowdown in Malaysia ignores the fact that China is a major exporter to the US. The China exports USD288 billion. It has been estimated that 21% of Chinese export goes to the US in 2006; in the same year, about 19% of Malaysian export goes to the US. Needless to say, a US slowdown will affect China. Therefore, I doubt the Chinese would be our savior.

There are of course many other economies in this world and the US is just one of them. Yet, we would be digging our own grave if we underestimate the importance of the US economy to Malaysia. So, I hope that would put the booming Chinese economy argument to rest.