Don T Lose Focus Over Short Term Fluctuations

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An old October 2018 article citing Nikkei Asian Review reports has been viralled online by irresponsible elements to give the misleading perception that the economy is currently recording negative statistics that are bad for the Malaysian economy
The two-month-old article uses August trade statistics, specifically stating that the 2018 August trade surplus figure of only RM1.6 billion was the lowest in 45 months. However, giving a monthly snapshot is not accurate because it does not correspond with Malaysia’s performance over the whole year
Just two months after the August figures, later in October, Malaysia’s trade surplus rose to a record of RM16.3 billion, the highest level ever in Malaysian history. Exports rose 17.7 percent to RM96.4 billion in the same month, a record high for the country. This shows that monthly data is extremely volatile and does not reflect the entire picture of the domestic economy
Therefore, we should not lose focus over short-term fluctuations, especially when the overall economic situation is more accurately depicted by longer-term trends
Figures such as the Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) for December 2018 falling to a low of 46.8 points – while relevant to that particular month – should not be considered as a reflection of the entire economy for the whole year. PMI figures may go up in later months, just like the sterling trade performance in the month of October 2018
Indeed, longer-term figures such as approved manufacturing FDI for the first nine months of 2018 rose 250 percent to RM49 billion. These investments will be realised in the future to create high-quality jobs for Malaysians. Additionally, Malaysia’s stock market was the second-best performer in Asia-Pacific in 2018
Meanwhile, inflation averaged only 1.0 percent year-on-year for the first 11 months of 2018 helped by the removal of GST and replaced by the SST. Inflation will remain favourable to consumers in the near future, due to low energy prices. The ringgit has improved to RM4.14 to a US dollar today, from RM4.20 in November 2018 when it was at its weakest
Finally, Malaysia still has a sizable current account surplus of RM22.7 billion or 2.5 percent of GDP as of end September 2018, with the positive current account balance expected to persist this year as well. This is partly the reason why Malaysia’s international credit ratings have been maintained, and the reason Bloomberg placed Malaysia as the best among 20 emerging markets for investment
I would like to stress that the domestic banking system continues to have sufficient liquidity while the monetary system is healthy and stable. The government will continue to help grow the economy sustainably to benefit the rakyat
Sayangi Malaysiaku!LIM GUAN ENG is the finance minister. - Mkini

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