Categories
Economics

[2709] Why Malaysia’s 2Q2013 GDP growth was mostly about government spending?

This chart can be a bit confusing but it essentially shows the contribution of the four GDP components to Malaysia’s overall real GDP growth.

20130829GDPgrowthContribution2Q2013

This is exactly the reason why I said it was all government spending previously (okay, all is not exactly accurate. It was a significant contributor, if you like). You can see how the government spending portion suddenly appeared strongly in the second quarter of 2013, while investment and consumption’s contribution shrank. Change in net exports was less bad but in terms of year-on-year contribution, it was less than the change in government spending by a huge margin.

Why did government spending go up?

It was the election as mentioned before (by the way, just to be clear, government spending here is more than federal government spending. Federal government spending was really decent, in contrast of the GDP numbers).

In some ways, the election was a de facto stimulus for the economy. The timing of the election was a fortunate accident. Overall growth would have been far worse without the increase in government expenditure. I calculated that if there were no government expenditure growth at all, the GDP would have expanded by about 2.0% YoY only.

Categories
Economics

[2708] That cycle between private and government investment

Here is something I have taken for granted before, taken from the latest Malaysian national accounts (GFCF is investment).

2Q2013 GDP GFCF

Categories
Economics

[2707] A quick take on 2Q2013 GDP: it’s all government spending!

Malaysia’s GDP grew 4.3% YoY in the second quarter of 2013, slightly faster than 4.1% YoY in the previous quarter.

While it is faster growth, I find the numbers worrying because if it was not for government spending, overall growth would have been much worse. Investment growth was down, private consumption was down and exports contracted.

The government spending was just because of electioneering. Election saved Malaysia. Really (This can be confusing since federal government spending actually decreased from a year ago. Yea, I was surprised to find that out. The GDP government spending includes non-federal government spending. Please take note of that).

The good news is that, I think things will be brighter from now on. Investment should increase because there is more political clarity moving out of the second quarter.

I also think exports will improve, for reasons I have written previously.

Categories
Economics WDYT

[2706] Guess the 2Q2013 GDP growth!

It is that time again. Malaysia’s Department of Statistics will release the second quarter GDP figures on August 21. Growth in the first quarter was 4.1% YoY no thanks to eroded trade surplus. Domestic demand however held up well and prevented the growth figure from being worse.

The situation on the trade surplus front has worsened tremendously over the second quarter. In fact, some private economists are fretting over the possibility of Malaysia experiencing its first trade deficit in a long time as exports have been doing really bad.

I think exports will improve in the second half of the year. Imports of intermediate goods have grown faster in June while imports of capital goods contracted less badly. I think these figures say something about future exports since Malaysia re-exports a lot of its imports.

In any case, there are some indications that domestic demand growth finally slowed. I have some expectations that bad news on the external front will affect domestic demand. It has not happened so far but we will see soon how domestic demand grew in the second quarter.

The upside is that government spending could prove to be an important driver of growth in this quarter, mostly because it was an election quarter. For the same reason, investment might grow slower.

There is also base effect to worry since in the 2012 second quarter, growth was 5.6% YoY. While it is a mathematical artefact, it does highlight how hard it is for the GDP to grow faster than it did previously, especially in this kind of environment. This is a case for somebody to develop seasonally adjusted GDP, but that is another story for the wonks.

Ultimately, I expect growth to be about the same as last quarter, if not worse. I will be surprised if growth is anything greater than 4.5% YoY. What about you?

How fast do you think did the Malaysian economy grow in 2Q2013 from a year ago?

  • Above 5.0% (6%, 1 Votes)
  • 4.5% to 5.0% (18%, 3 Votes)
  • 4.0% to 4.4% (35%, 6 Votes)
  • 3.5% to 3.9% (18%, 3 Votes)
  • Below 3.5% (24%, 4 Votes)

Total Voters: 17

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Categories
Society

[2705] A retreat from openness

There was a time when we only heard or read news of strangers becoming victims of crime. It was easy to shrug off the news because the victims were strangers. Somebody would cry for them but that somebody would not be us. We would just go on with our lives and worry about other things that were not at all worrisome. We would have to be very, very unlucky if we made it into the news ourselves.

Those days have receded into the background. It is starting to feel that it does not take random luck anymore to become a victim. We need to take active steps instead to prevent ourselves from becoming one.

In response, I think our society is becoming more reclusive than before as we collectively try to avoid becoming victims ourselves.

The idea of becoming a victim of crime is not so foreign anymore. In the past, the victim would be two, three or more degrees separated from us. Nowadays, it is likely that most of us personally know someone who has become a victim. It could be our family, friends, neighbors or colleagues.

That is definitely true in my case. While I have not become a victim myself, I know friends — not mere acquaintances — who have become victims of crime in recent years. One of them was robbed at knife-point after being taken for a ride in a cab some months ago. Thankfully the perpetrator was later apprehended and sentenced swiftly, but only after he raped a tourist.

Another almost lost his pinky while defending himself in a robbery. Yet another was beaten up and had his car taken away from him.

The whole experience is disconcerting. It is a feeling of you standing in the middle of a crowd and everybody surrounding you being eaten by wolves. Long ago there were lots of people and strangers especially between you and the wolves. Today, you can almost see the wolves themselves. It is too close for comfort.

However, the men and women of transformation try to convince us that it is merely a matter of perception — no thanks to the social media which is unhelpfully amplifying the fear as they would say — you get the feeling that you will be next. Rightly or wrongly, it gives out a sense of fatalism. It is not a matter of if. You only need to ask the wolves when.

While it is easy to be apathetic when a stranger has her handbag snatched or his house broken into, it is almost impossible to remain indifferent when your loved ones become victims. If it happens often enough, we will begin to take action on our own.

Some of us have. Looking around the city, the word ”some” is an understatement.

The first to come up noticeably were the boom gates and fences surrounding our neighborhoods in the suburbs. Along with private security services, residents put them up to deter home invasions. Sometimes, when I find myself inside one of those overzealous neighborhoods, I feel as if I am in a fortress, as if the world outside comprises of barbarians to be repelled and kept out.

The truth is that the security measures keep more than potential criminals out. Passing through these checkpoints can be a hassle. As we put them up, we will likely get fewer of the good kind of visitors in the process. In effect, we retreat inside our four walls.

Some of us have guns on ourselves. In the news some weeks back, a ”˜Tan Sri’, while waiting to meet his doctor at a clinic in Cheras in Kuala Lumpur, managed to defend himself and others in the clinic against a gang of robbers by shooting at them. One robber died. This is a rare story of a person successfully defending himself. But I wonder, what is the implication of that?

Do we now need guns to protect ourselves?

I am a libertarian and libertarians usually demand the right to bear arms. While that is so, I think libertarians, or at least just myself, also have higher ideals and that is to live in an open society. Whatever the value of the right to bear arms, guns do have a corrosive effect on openness. I would not have the guts to walk the streets where everybody is armed to the teeth.

Yet, unfortunately, we do not need the right to bear arms to be in that situation.

This week alone saw more people getting shot. One of them, a prominent local banker, was shot dead in broad daylight in the middle of the city. And who can forget, just months ago, a top official of the royal custom was shot dead in the middle of Putrajaya. If these happen all too often in a country with supposedly tough anti-guns laws, public places would be dearth of life.

I know I am not nearly as important as some of the victims mentioned here. That probably means that I am not a target per se. Nevertheless, I would not want to be there when it happens to some important persons. Being an accidental witness cannot only be emotionally horrifying, the shooters may not like a person witnessing the crime.

If we make it there without being stabbed or shot at, our future will be a reclusive, untrusting society. The future is not fixed but the path we are taking right now leads towards that future.

An easy and safe response is to stay at home, be quiet and be reclusive. No adventure, no meeting up with strangers and not even walking on the street alone.

Already we jog in gyms and not in the parks. Even in the parks, if we do run or walk, when we come upon a stranger along the path, we will run a bit faster rather than smile and say, “How do you do?”

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malay Mail Online on August 4 2013.