Thursday, February 22, 2007

It's the Economy, Stupid...

Well that's what Bill Clinton told George Bush (Sr) when he defeated the latter in the 1992 presidential elections in the United States. It is also true that the Malaysian electorates pretty much focuses on the bread and butter issues when deciding which party they decide to vote for. Hence it is unsurprising that the Pak Lah's administration has for the past 2 weeks launched a relentless campaign in the local printed media to let Malaysians know that the economy is in a better shape than ever.

As reported by Reuters, "the mainstream media, which generally cheers the administration, went to town last week with a slew of upbeat stories ranging from a record 2006 trade volume to rocketing share prices, a stronger ringgit and rising foreign reserves."
"Good times are back," blared one headline in the best-selling Star newspaper, summing up comments by Second Finance Minister Nor Mohamed Yakcop.

"The feel good factor is clear. Retailers are enjoying better business and restaurants are packed," the minister said.

"Economy now more resilient than ever," was the headline in the New Straits Times, a daily controlled by Abdullah's ruling party.

More such stories are on the cards, said one editor, who attended a government briefing recently.
The crux of Pak Lah's feel good campaign is the booming stock market, which is apparently close to matching it's 13 years high.
"I can see the momentum is already there. What is important is that we have the momentum now and it is moving forward ... and upwards. But we need to build on it so that we can develop our economy even further."

The Prime Minister also said that after hitting a 10-year high of 1,258.63 last week, the Kuala Lumpur Composite Index might breach the 1,350 mark - the highest in Malaysia’s history. He said it was up to Malaysians to “push hard” to achieve it.
So, are the good times really back? Are Malaysians enjoying significantly better wealth and prosperity?

Before I attempt to evaluate the above, let's get a few facts out of the way. Malaysia's economy is not in the doldrums, certainly unlike the years in which we have suffered from multiple crises and recessions. Based on official statistics, there is still fairly low unemployment levels and while inflation is rising, it is still within a moderate range.

However, does it justify the rosy spin which we are seeing today? Our 'dispute' with the Government has always been on the fact that we are clearly underachieving our potentials, especially when compared against our neighbours with poorer resources, fewer people and smaller land areas.

Having written thus far, I realise that I have plenty plenty to discuss which might be too long to all dumped into a single post. Hence, I'll be breaking up this topic into several posts, with the next one focusing on the stock market, particularly on it as a reflection of Malaysia's economy.

Here's a teaser, the stock market has boomed by more than 30% in the past 6 months or so. Question: Have your income or wages increased by the same proportion?
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