Iqbal--I received this thru an e-mail today -- appreciate any thoughts that you may have regarding the comments and its implications for the Asian markets and the US market
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Lim Kit Siang has been a leader of the (political) opposition for the past 30 years. Musa Hitam is former deputy prime minister who quit in the 80s after a falling out with Mahathir.
>Is Malaysia heading towards a recession even worse than the 1980s, when the 1985 GDP contracted to -1 per cent?
>
>by Lim Kit Siang
>
>
>(Petaling Jaya, Monday): Up to now, the Government has not explained why
>it had failed to prepare the people for the bad economic results of the
>first quarter of 1998, when the Malaysian gross domestic product shrank by
>1.8 per cent, as compared to an expansion of 6.9% posted in the fourth
>quarter of 1997 and 7.8% posted for all of last year.
>
>With the gross domestic product shrinking 1.8 per cent in the first
>quarter, economists said Malaysia is now expected to head into recession
>this year -- technically with at least two consecutive quarters of negative
>growth.
>
>The biggest economic question today is whether Malaysia is heading towards
>a recession even worse than the 1980s, when the 1985 GDP contracted to -1
>per cent.
>
>The saddest part of the shock announcement of the totally unexpected
>negative 1.8 per cent growth in the gross domestic product for the first
>quarter is that the authorities concerned, whether the government or Bank
>Negara, have learnt nothing about crisis management or the supreme
>importance of gaining confidence.
>
>The "denial syndrome" of the goverment is so ingrained that it only wanted
>to paint a very rosy picture - with Ministers competing with each other in
>their declaration as to how fast the economic recovery would come about -
>while hiding the bad news from the people.
>
>Economists, analysts and the Malaysian public have discounted for such a
>government "denial syndrome", which is the reason why there is the crisis
>of information deficit leading to the greater crisis of confidence, but
>what they had not expected is that their worst fears have proved to be too
>conservative.
>
>The worst economic data for the first quarter which the market had
>anticipated was between minus one per cent and plus 2 per cent -- but the
>result turned out to be the disastrous -1.8 per cent.
> =20
>The market has learnt not to trust the government and is expecting bad
>news, but it never expected such bad news!
>
>At 5 p.m., the Kuala Lumpur Stock Exchange Composite Index fell by 17.29
>points to close at 520.95 points while the Malaysian ringgit plunged to
>3.9374 against the US dollar.
>
>These are market reactions not only to the bad news of -1.8 per cent
>contraction of the GDP in the first quarter, but a clear signal of market
>loss of confidence in the crisis management by the government of the worst
>economic crisis faced by Malaysia.
>
>Former Deputy Prime Minister Tan Sri Musa Hitam had probably described
>Malaysia=92s economic crisis management in his closing address to the
>Harvard Project for Asian and International Relations Conference yesterday,
>when he said that Asia=92s previous economic success, which was dubbed the
>Asian Miracle, had bred arrogance, corruption, decadence and failures.
>
>He said countries in the region had reacted with an acceptance of
>responsibility for the problem and taken remedial action immediately.
>
>"There are some countries that indulge in the denial syndrome=85yet are
>forced to take remedial action grudgingly.
>
>"There are those who deal with the problem with cool acceptance of the
>reality of the situation, adopting a no-nonsense approach towards remedial
>action and getting on with the job at hand to put their act together."
>
>Why are the Prime Minister, Datuk Seri Dr. Mahathir Mohamad and Malaysia
>the prime examples of "denial syndrome" remaining in the region almost one
>year after the Asian economic crisis - refusing to adopt a no-nonsense
>approach by carrying out wide-ranging political, economic and financial
>reforms and declare an all out war against corruption and cronyism?=
> |
