Download Economy

Economic Briefing
4 August 2007
Presentation Outline
•
Indicators of selected countries
•
Malaysia’s key economic indicators
•
•
MIER 2Q07 Surveys
Near-term outlook
GDP Growth (%)
15
10
5
0
-5
-10
-15
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
Domestic Investment (% of GDP)
50
45
40
35
30
25
20
15
10
5
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
Export Growth (%)
35
30
25
20
15
10
5
0
-5
-10
-15
-20
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
CAB as % of GDP
30
25
20
15
10
5
0
-5
-10
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
FDI Inflows
25
US$ billion
20
15
10
5
0
-5
-10
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Malaysia
Thailand
Indonesia
Korea
Singapore
Fiscal Balance (% of GDP)
14
12
10
8
6
4
2
0
-2
-4
-6
-8
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
Foreign Reserves
(US$ billion)
250
200
150
100
50
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
Inflation Rate (%)
20
15
58.5% 20.5%
10
5
0
-5
1998
1999
Indonesia
2000
2001
Malaysia
2002
2003
Thailand
2004
Korea
2005
2006
Singapore
Interest Rate (6m FD,%)
40
35
30
25
20
15
10
5
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
Non-Performing Loans
(3-months arrears)
40
35
30
25
20
15
10
5
0
2001
Indonesia
2002
Malaysia
2003
2004
Thailand
2005
Korea
2006
Singapore
Unemployment Rate (%)
12
10
8
6
4
2
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Singapore
Real Effective Exchange Rate
(2000=100)
Indonesia
Malaysia
Korea
Thailand
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
150
140
130
120
110
100
90
80
Singapore
% Change in Stock Indices as
at 11th July’07, since Jan’07
32
Korea KOSPI
Thai SET
Mal KLCI
Philip PCOMP
Indon JCI
Sing STI
Hong Kong HIS
26.27
25.1
25.0
24.28
21.25
12.68
0
10
20
Positive Return
30
40
Debt Service Ratio (% of exports)
45
40
35
30
25
20
15
10
5
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia
Malaysia
Thailand
Korea
Relative Productivity
country
Productivity
growth (%)
Productivity in
constant US$
China
Indonesia
India
Malaysia
9.7
6.4
6.0
3.7
2,885
2,128
1,276
11,716
Korea
Thailand
USA
3.7
3.5
1.5
28,956
4,454
77,989
Singapore
1.2
48,782
MALAYSIA’s KEY ECONOMIC INDICATORS
•
•
•
•
•
•
•
•
•
•
•
•
•
Leading index
External trade
Exports to major partners
Import sources
Industrial Production Index (IPI)
Foreign direct investments (BOP)
Monetary indicators
Inflation
Exchange rates
External reserves
Unemployment
Productivity performance
MIER survey trends
Composite Indices & GDP Growth
20
%change yoy
15
10
5
-10
-15
RGDP(%yoy)
Coincident Index
Leading Index
1Q07
1Q06
1Q05
1Q04
1Q03
1Q02
1Q01
1Q00
1Q99
1Q98
1Q97
-5
1Q96
0
Malaysia: Exports, Imports and
Trade Balance
Imports by Category
External Trade
• exports dominated mainly by manufactures, especially E&E
• export structure remain unchanged but value-added have
increased
% share
Manufactured goods
90
80
70
E&E
60
50
40
30
20
Oil+LNG
10
Palm oil
0
1995
Source: DOSM
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Exports to Major Partners
•
•
•
traditional markets for Malaysia: US, Singapore, EU and Japan
Singapore, EU and Japan show declining market share
China account for an increasing share of Malaysia’s exports
% share
25
USA
20
Singapore
EU
15
Japan
10
China
5
0
1995
1996
Source: DOSM
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Foreign Direct Investments
• FDI (from BOP), although increasing, still far from precrisis levels
• Malaysian investment abroad rising
• portfolio flows remain volatile
9
7
% of GDP
5
3
1
-1
-3
-5
1999
2000
2001
2002
2003
FDI as % of GDP
Invest Aboad as % of GDP
Source: DOS
2004
2005
2006
1Q07
Portfolio as % of GDP
Foreign Approvals in Manufacturing
• total of 571 projects approved in 2006, level of FDI approved
highest to date
• foreign investments amount >RM20 billion (43.9% of total)
• Japan largest source of investments
25000
6000
5000
20000
Total Approvals (LHS)
15000
4000
USA
(RHS)
3000
10000
Japan
UK
5000
2000
Singapore
1000
China
0
0
2001
Source: MIDA
2002
2003
2004
2005
2006
Foreign Approvals by
Country, Jan-May’07
Iran
19%
Others
28%
Netherlands
14%
Australia
2%
Korea,Rep.
5%
Cayman
Islands
USA
6%
7%
Source: MIDA
Singapore
8%
Japan
11%
Foreign Approvals by
Industry, Jan-May’07
Machinery &
Equip
3%
Paper,Printing
0%
Others
4%
Food Manuf
2%
Non-Metallic
Mineral
7%
Chemical
Products
4%
Basic Metal
1%
E&E
56%
Source: MIDA
Petroleum
Products
23%
IPI
Mining
Manuf
Electricity
May-07
Mar-07
Jan-07
Nov-06
Sep-06
Jul-06
May-06
Mar-06
Jan-06
Nov-05
Sep-05
Jul-05
May-05
Mar-05
Jan-05
Malaysia: Industrial
Production Index (IPI)
% y-o-y
15
10
5
0
-5
-10
Inflation Rate
• inflation soften following peak of 4.8% in March’06
due to higher price of fuel
• core inflation also trending generally lower
6
5
4
3
2
Source: BNM
May-07
Mar-07
Jan-07
Nov
Sep
Core Inflation
Jul
May
Food Index
Jan-06
Sep
Jul
May
Mar
Jan-05
0
Nov
CPI
Mar
1
Monetary Indicators
• Moderate growth in M1, M2 and M3
35
M1
M2
M3
30
25
20
15
10
Source: BNM
May-07
Mar-07
Jan-07
Nov
Sep
Jul
May
Mar
Jan-06
Sep
Jul
May
Mar
Jan-05
0
Nov
5
Source: BNM
5/7/07
27/6/07
EUR
19/6/07
11/6/07
1/6/07
GBP
24/5/07
16/5/07
US$
8/5/07
25/4/07
17/4/07
9/4/07
30/3/07
22/3/07
14/3/07
6/3/07
26/2/07
14/2/07
6/2/07
26/1/07
18/1/07
10/1/07
29/12/06
RM vs. Major Currencies
0.92
RM appreciates
0.94
0.96
0.98
1.00
1.02
JPY100
1.04
Source: BNM
5/7/07
27/6/07
19/6/07
IDR100
11/6/07
KRW100
1/6/07
THB100
24/5/07
SGD
16/5/07
8/5/07
25/4/07
17/4/07
9/4/07
30/3/07
1.04
22/3/07
14/3/07
6/3/07
26/2/07
14/2/07
6/2/07
26/1/07
18/1/07
10/1/07
29/12/06
RM vs. Regional Currencies
0.94
RM appreciates
0.96
0.98
1.00
1.02
PHP100
1.06
Current Account Balance
current account surplus still sizeable, at 17.8% of GNP in
2006
% of GNP
35
30
25
20
15
10
5
-15
CAB
Servs & Inv. inc.
Merchandise
'07f
'06
'05
'04
'03
'02
'01
99
'00
-10
98
97
96
-5
95
0
Foreign Reserves
•
•
international reserves at a sizable US$98.4 billion in June 2007
equivalent to nearly 8.9 months of retained imports & 8.7 times the shortterm external debt
Source: BNM
Unemployment Rate
• employment rose an average of 3.3%pa with 1.6 million jobs
created between 2001-2005
Source: DOSM
Productivity Performance
•
favourable productivity growth thanks to continuous efforts to enhance
productivity and high capacity utilisation in both domestic and exportoriented industries
%
20
15
10
5
0
1997
1998
1999
2000
2001
-5
-10
Productivity Growth
-15
Source: NPC
GDP
2002
2003
2004
2005
2006
Malaysia: Total Loan and
Deposit Growth
% y-o-y
20
18
16
14
12
10
8
6
Total Deposit
Loans (outstanding)
May-07
Mar-07
Jan-07
Nov-06
Sep-06
Jul-06
May-06
Mar-06
Jan-06
Nov-05
Sep-05
Jul-05
May-05
Mar-05
Jan-05
4
Malaysia: Loans Approved &
Disbursed
% y-o-y
Loans disbursed
Loans approved
May-07
Mar-07
Jan-07
Nov-06
Sep-06
Jul-06
May-06
Mar-06
Jan-06
Nov-05
Sep-05
Jul-05
May-05
Mar-05
Jan-05
90
80
70
60
50
40
30
20
10
0
-10
-20
-30
Household Loans to GDP (%)
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Real Interest Rate (%)
6
5
4
Inflation
3
2
1
3mF
D
0
-1
-2
-3
Real Interest Rate
Inflation
3m Fixed Dep
16
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
NPLs/Total Loans Ratio
& Capital Adequacy Ratio
%
14
12
10
8
6
4
2
0
RWCR
3-month arrears
6-month arrears
Malaysia: External Debt
250
RM billion
200
150
100
50
Medium & Long-term External Debt
Short-term Debt
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
3Q02
1Q02
3Q01
1Q01
3Q00
1Q00
0
MIER 2Q07 INDICES
The
Business Conditions Index
(BCI)
Business Conditions Survey
on firmer footing
points
130
• BCI chalked an
impressive 16.6 points
to 122.1
120
• uptick in sales
110
• pickup in output
100
activities
• higher local orders
90
• turnaround in export
80
orders
70
'00
'01
'02
'03
'04
'05
'06
'07
BCI and Quarterly GDP Growth
13
%
GDP growth
140
130
8
122.1
1Q07
105.5
5.3
-1.9
4Q06
107.2
5.7
0.5
110
3Q06
107.8
6.0
3.9
100
2Q06
102.4
6.1
2.7
1Q06
102.5
6.0
-2.8
4Q05
100.5
5.2
1.8
3Q05
102.7
5.3
3.8
2Q05
106.0
4.1
2.4
1Q05
104.1
6.1
-2.9
90
-2
BCI
80
70
-7
60
-12
50
'00
'01
'02
'03 '04
'05
'06
GDP
GDP
y-o-y q-q
2Q07
120
3
Quarter BCI
Production
shifting to higher gear
% responded ‘better’
•
44% increased production,
higher than 26% in 1Q07
•
output of wood and woodbased products continue to
accelerate (75% reported
increase)
•
increases also observed in
food and beverage, textiles
and apparel, paper and
paper products, chemicals
and chemical products, nonmetallic products, basic
metal and metallic products
60
50
40
30
20
10
0
'00
'01
'02
'03
'04
'05
'06
'07
Capacity Utilisation
up a notch
• capacity utilisation
averaged 80.4 from the
previous reading of 79.6
• industries like paper and
paper products, nonmetallic products
maintained capacity
between 81-100%
% responding positively
86
40
35
84
30
82
25
80
20
78
15
• chemicals and chemical
products, rubber and
rubber-based products
also shifted to near-full
capacity
76
10
74
5
72
0
'00
'01
'02
'03
C U Rate
'04
'05
Investment
'06
'07
Capital Investment
going strong
• 28% reveal higher
investments,
edging up from
22% in 1Q07
• firms from food and
beverage, textiles
and apparel
committed more
funds for capital
investment
% responding positively
60
Production
Investment
50
40
30
20
10
0
'00
'01
'02
'03
'04
'05
'06
'07
Inventories
smooth flow
40
•
•
35
19% reported fatter
stockpiles, lower than
27% in previous quarter
30
25
20
stocks running lower for
textiles and apparel and
plastics and plastic
products
15
10
5
% responded ‘higher’ stocks
0
'00
'01
'02
'03
'04
'05
'06
'07
The
Consumer Sentiments Index
(CSI)
Consumer Sentiments Index (CSI)
no let-up in confidence
140
130
120
CSI
110
100
90
80
70
96
97
98
99
'00
'01
'02
'03
'04
'05
'06
'07
• CSI rises to 115.9 points in 2Q07, from 104.2 points in
•
2Q06 and 124.1 in 1Q07
jobs and incomes lift sentiments
COMPONENTS OF
CONSUMER SENTIMENTS
% responded ‘better’
 incomes stable in
second quarter
and expected to
pick up in the third
quarter
 good momentum
of employment
prospects in
coming months
45
2Q06 1Q07 2Q07
40
35
30
25
20
15
10
5
0
Current income
Expected
income
Expected
Employment
Spending plans
high on consumers’ agenda
 personal computers
Cooker/Oven
PC
Fridge
W/Machine

TV
Furniture

Car
House
0
2
2Q06
4
6
1Q07
8
2Q07
10
12
most sought-after,
followed by cars and
furniture
houses still holding
up; plans strongest in
the eastern region
public sector wage
hike and mega sale
carnival boost
spending plans
Inflationary Expectations
a big worry

82% of respondents frown
over higher prices in the
next 6 months, up from
76% in 1Q07, down from
90
85
80
85% in 2006

75
anxieties rise in middleincome group and eastern
70
region
65
60
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07
BCI, CSI, TEC & GDP Growth
140
130
15
BCI/CSI
GDP%
120
10
5
110
100
0
90
-5
80
-10
70
BCI
CSI
TEC-MIER
GDP
'07
'06
'05
'04
'03
'02
'01
'00
99
98
97
-15
96
60
MIER’s Sectoral Indices
150
150
140
130
140
130
120
110
120
110
100
90
100
90
80
70
80
70
60
60
2Q01
1Q02
4Q02
3Q03
2Q04
1Q05
4Q05
3Q06
2Q07
Auto Industry Index
Residential Property Index
Retail Trade Index
Tourism Market Index
NEAR-TERM OUTLOOK
•
•
•
•
•
•
•
•
•
World economy
Real GDP growth
exports of goods and services
imports of goods and services
private investment
public investment
growth by sector
inflation
unemployment
World Economy
6
5
% growth
4
3.6
4.6
4.1 4.2
4.0
3.7
2.8
3
5.1 4.9 5.1 4.9 4.9
2.5
3.0
2
1
0
-1
95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08
-2
World GDP
USGDP%
EU-GDP%
JapGDP%
Real GDP Growth
• Malaysian economy expected to ease somewhat given
the uncertainty in the global outlook for 2007
• GDP projected to grow by 5.7% in 2007 (06: 5.9%)
Source: DOSM, MIER
Exports and Imports
•
•
export growth in 2007 expected to decelerate (‘07:5.0%) as growth in
developed countries softens
imports to moderate (‘07:6.8%), in line with softer export growth
Source: DOSM, MIER
Private and Public Consumption
•
•
private consumption to stay resilient (‘07:6.6%) though moderating
consumer sentiments affected by higher living expenses
% change
20
15
10
5
0
'98
'99
'00
'01
'02
'03
'04
'05
'06e
-5
-10
-15
Source: DOSM, MIER
Private
Public
'07f
Private and Public Investment
• private investment to remain key driver (‘07:10.3%)
• expansion in public investment (‘07:11.5%) driven by the 9MP
% change
50
30
10
-10
'98
'99
'00
'01
'02
'03
'04
'05
'06
-30
-50
-70
Source: DOSM, MIER
Private
Public
'07f
Federal Government Fiscal Balance
(% of GDP)
15
%
10
5
2.3
0.2
0
-3.6-3.2-2.9
-5
-15
-20
-6.9
-9.9
0.8 0.7
-0.8
-1.8
-3.2
-5.8-5.5-5.6-5.3
-4.3-3.8
-3.5-3.4
-7.6
-10.5
-15.6
-16.7
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006e
2007f
-10
-6.0-5.7
-2.0
2.4
Fiscal Balance (% of GDP)
GDP Growth (%)
Growth by Sector
•
•
•
slower growth for manufacturing as export demand eases
new infrastructure projects to help rebound in construction
mining to grow modestly thanks to sustained demand for petroleum and natural
gas
% growth
'06
'07f
'08f
8
7
6
5
4
3
2
1
0
Agriculture
-1
-2
Source: DOSM, MIER
Mining
Manufacturing
Construction
Serv ices
Inflation and Unemployment
•
•
inflation pressures to moderate (‘07:2.4%)
unemployment to remain low (‘07:3.5%)
%
6
Inflation
Unemployment
'04
'06e
5
4
3
2
1
0
'98
Source: DOSM, MIER
'99
'00
'01
'02
'03
'05
'07f
DOWNSIDE RISKS
Terrorist threats
rising
Oil price
overshooting
Downside
Risks
US economy slower
than 2.1% in ‘07
Global imbalance
worsening
Europe’s & Japan’s
growth falter
ISSUES & CONCERNS
• Economy underperforming
• Jobless growth
• Domestic sector not investing enough
• Declining private consumption
expenditure
• Growing income disparity
• Inadequate EPF savings for old age
• Brain drain
• Credit-card bankruptcies on the rise
• Too much dependence on immigrant
workers
• Vulnerability to crisis