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Presentation OutlinePresentation Outline Presentation OutlinePresentation Outline
• Indicators of selected countries
• Malaysia’s key economic
indicators
• MIER 2Q07 Surveys
• Near-term outlook
• Indicators of selected countries
• Malaysia’s key economic
indicators
• MIER 2Q07 Surveys
• Near-term outlook
GDP Growth (%)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)Domestic Investment (% of GDP)
0
5
10
15
20
25
30
35
40
45
50
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
Export Growth (%)Export Growth (%)
-20-15
-10-50
510
152025
3035
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
CAB as % of GDPCAB as % of GDP
-10
-5
0
5
10
15
20
25
30
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
FDI InflowsFDI Inflows
-10
-5
0
5
10
15
20
25
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Malaysia Thailand Indonesia Korea Singapore
US$ billion
Fiscal Balance (% of GDP)Fiscal Balance (% of GDP)
-8-6
-4-20
24
68
10
1214
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
Foreign Reserves (US$ billion)
Foreign Reserves (US$ billion)
0
50
100
150
200
250
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
Inflation Rate (%)Inflation Rate (%)
-5
0
5
10
15
20
1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
58.5% 20.5%
Interest Rate (6m FD,%)Interest Rate (6m FD,%)
0
5
10
15
20
25
30
35
40
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
Non-Performing Loans (3-months arrears)
Non-Performing Loans (3-months arrears)
0
5
10
15
20
25
30
35
40
2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
Unemployment Rate (%)Unemployment Rate (%)
0
2
4
6
8
10
12
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea Singapore
Real Effective Exchange Rate (2000=100)
Real Effective Exchange Rate (2000=100)
80
90
100
110
120
130
140
150
Jan-00Jul-00Jan-01Jul-01Jan-02Jul-02Jan-03Jul-03Jan-04Jul-04Jan-05Jul-05Jan-06Jul-06Jan-07
Indonesia Malaysia Korea Thailand Singapore
80
90
100
110
120
130
140
150
Jan-00Jul-00Jan-01Jul-01Jan-02Jul-02Jan-03Jul-03Jan-04Jul-04Jan-05Jul-05Jan-06Jul-06Jan-07
Indonesia Malaysia Korea Thailand Singapore
% Change in Stock Indices as at 11th July’07, since
Jan’07
% Change in Stock Indices as at 11th July’07, since
Jan’07
12.68
21.25
24.28
25.0
25.1
26.27
32
0 10 20 30 40
Positive Return
Korea KOSPIThai SETMal KLCIPhilip PCOMPIndon JCISing STIHong Kong HIS 12.68
21.25
24.28
25.0
25.1
26.27
32
0 10 20 30 40
Positive Return
Korea KOSPIThai SETMal KLCIPhilip PCOMPIndon JCISing STIHong Kong HIS
Debt Service Ratio (% of exports)
Debt Service Ratio (% of exports)
0
5
10
15
20
25
30
35
40
45
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Indonesia Malaysia Thailand Korea
Relative ProductivityRelative ProductivityRelative ProductivityRelative Productivitycountry Productivit
y growth (%)
Productivity in constant US$
China 9.7 2,885
Indonesia 6.4 2,128
India 6.0 1,276
Malaysia 3.7 11,716
Korea 3.7 28,956
Thailand 3.5 4,454
USA 1.5 77,989
Singapore 1.2 48,782
MALAYSIA’s KEY ECONOMIC INDICATORSMALAYSIA’s KEY ECONOMIC INDICATORSMALAYSIA’s KEY ECONOMIC INDICATORSMALAYSIA’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
• 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 GrowthComposite Indices & GDP Growth
-15
-10
-5
0
5
10
15
20
1Q961Q971Q981Q991Q001Q011Q021Q031Q041Q051Q061Q07
RGDP(%yoy) Leading Index
Coincident Index
%change yoy
Malaysia: Exports, Imports Malaysia: Exports, Imports and Trade Balanceand Trade Balance
Malaysia: Exports, Imports Malaysia: Exports, Imports and Trade Balanceand Trade Balance
0
2
4
6
8
10
12
14
Jan-05Mar-05May-05Jul-05Sep-05Nov-05Jan-06Mar-06May-06
Jul-06Sep-06Nov-06Jan-07Mar-07May-07
RM bill
-10
-5
0
5
10
15
20
25% y-o-y
Trade Balance Export(%y-o-y) Import(%y-o-y)
Imports by CategoryImports by CategoryImports by CategoryImports by Category
-30
-20
-10
0
10
20
30
40
Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-05Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06
Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07
% y-o-y
Capital goods Intermediate Consumption
External TradeExternal TradeExternal TradeExternal Trade• exports dominated mainly by manufactures, especially
E&E• export structure remain unchanged but value-added have
increased
• exports dominated mainly by manufactures, especially E&E
• export structure remain unchanged but value-added have increased
0
10
20
30
40
50
60
70
80
90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
% share
0
10
20
30
40
50
60
70
80
90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
% share Manufactured goods
E&E
Palm oil
Oil+LNG
Source: DOSM
Exports to Major PartnersExports 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
• 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
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
% share
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
% share
USA
SingaporeEU
Japan
China
Source: DOSM
Foreign Direct InvestmentsForeign Direct Investments Foreign Direct InvestmentsForeign Direct Investments • FDI (from BOP), although increasing, still far from pre-crisis levels
• Malaysian investment abroad rising• portfolio flows remain volatile
• FDI (from BOP), although increasing, still far from pre-crisis levels
• Malaysian investment abroad rising• portfolio flows remain volatile
-5
-3
-1
1
3
5
7
9
1999 2000 2001 2002 2003 2004 2005 2006 1Q07
FDI as % of GDP Portfolio as % of GDP
Invest Aboad as % of GDP
% of GDP
-5
-3
-1
1
3
5
7
9
1999 2000 2001 2002 2003 2004 2005 2006 1Q07
FDI as % of GDP Portfolio as % of GDP
Invest Aboad as % of GDP
% of GDP
Source: DOS
Foreign Approvals in ManufacturingForeign Approvals in ManufacturingForeign Approvals in ManufacturingForeign 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
• 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
0
5000
10000
15000
20000
25000
2001 2002 2003 2004 2005 2006
0
1000
2000
3000
4000
5000
6000
0
5000
10000
15000
20000
25000
2001 2002 2003 2004 2005 2006
0
1000
2000
3000
4000
5000
6000
USA (RHS)
SingaporeChina
Japan
Total Approvals (LHS)
UK
Source: MIDA
Foreign Approvals by Foreign Approvals by Country, Jan-May’07Country, Jan-May’07
Foreign Approvals by Foreign Approvals by Country, Jan-May’07Country, Jan-May’07
Source: MIDA
Iran19%
Japan11%
Singapore8%
USA7%
Cayman Islands
6%
Korea,Rep.5%
Australia2%
Others28%
Nether-lands14%
Iran19%
Japan11%
Singapore8%
USA7%
Cayman Islands
6%
Korea,Rep.5%
Australia2%
Others28%
Nether-lands14%
Foreign Approvals by Foreign Approvals by Industry, Jan-May’07Industry, Jan-May’07Foreign Approvals by Foreign Approvals by Industry, Jan-May’07Industry, Jan-May’07
Source: MIDA
Petroleum Products
23%
E&E56%
Others4%
Food Manuf2%
Machinery & Equip3%
Paper,Printing0%
Non-Metallic Mineral
7%
Chemical Products
4%Basic Metal
1%
Petroleum Products
23%
E&E56%
Others4%
Food Manuf2%
Machinery & Equip3%
Paper,Printing0%
Non-Metallic Mineral
7%
Chemical Products
4%Basic Metal
1%
Malaysia: Industrial Malaysia: Industrial Production Index Production Index (IPI)(IPI)Malaysia: Industrial Malaysia: Industrial Production Index Production Index (IPI)(IPI)
-10
-5
0
5
10
15
Jan-05Mar-05May-05Jul-05Sep-05Nov-05Jan-06Mar-06May-06
Jul-06Sep-06Nov-06Jan-07Mar-07May-07
% y-o-y
IPI Mining Manuf Electricity
Inflation RateInflation RateInflation RateInflation Rate
0
1
2
3
4
5
6
Jan-05
Mar May Jul Sep Nov
Jan-06
Mar May Jul Sep Nov
Jan-07Mar-07May-07
CPI Food Index Core Inflation
0
1
2
3
4
5
6
Jan-05
Mar May Jul Sep Nov
Jan-06
Mar May Jul Sep Nov
Jan-07Mar-07May-07
CPI Food Index Core Inflation
• inflation soften following peak of 4.8% in March’06 due to higher price of fuel
• core inflation also trending generally lower
• inflation soften following peak of 4.8% in March’06 due to higher price of fuel
• core inflation also trending generally lower
Source: BNM
Monetary IndicatorsMonetary IndicatorsMonetary IndicatorsMonetary Indicators
0
5
10
15
20
25
30
35
Jan-05
Mar May Jul Sep Nov
Jan-06
Mar May Jul Sep Nov
Jan-07Mar-07May-07
M1 M2 M3
0
5
10
15
20
25
30
35
Jan-05
Mar May Jul Sep Nov
Jan-06
Mar May Jul Sep Nov
Jan-07Mar-07May-07
M1 M2 M3
• Moderate growth in M1, M2 and M3• Moderate growth in M1, M2 and M3
Source: BNM
RM vs. Major CurrenciesRM vs. Major CurrenciesRM vs. Major CurrenciesRM vs. Major Currencies0.92
0.94
0.96
0.98
1.00
1.02
1.04
29/12/0610/1/0718/1/0726/1/07
6/2/0714/2/0726/2/07
6/3/0714/3/0722/3/0730/3/07
9/4/0717/4/07 25/4/07
8/5/0716/5/07 24/5/07
1/6/0711/6/0719/6/07 27/6/07 5/7/07
US$ GBP EUR JPY100
RM appreciates
0.92
0.94
0.96
0.98
1.00
1.02
1.04
29/12/0610/1/0718/1/0726/1/07
6/2/0714/2/0726/2/07
6/3/0714/3/0722/3/0730/3/07
9/4/0717/4/07 25/4/07
8/5/0716/5/07 24/5/07
1/6/0711/6/0719/6/07 27/6/07 5/7/07
US$ GBP EUR JPY100
RM appreciates
Source: BNM
RM vs. Regional CurrenciesRM vs. Regional CurrenciesRM vs. Regional CurrenciesRM vs. Regional Currencies0.94
0.96
0.98
1.00
1.02
1.04
1.06
29/12/0610/1/0718/1/0726/1/07
6/2/0714/2/0726/2/07
6/3/0714/3/0722/3/0730/3/07
9/4/0717/4/07 25/4/07
8/5/0716/5/07 24/5/07
1/6/0711/6/0719/6/07 27/6/07 5/7/07
SGD THB100 PHP100
KRW100 IDR100
RM appreciates
0.94
0.96
0.98
1.00
1.02
1.04
1.06
29/12/0610/1/0718/1/0726/1/07
6/2/0714/2/0726/2/07
6/3/0714/3/0722/3/0730/3/07
9/4/0717/4/07 25/4/07
8/5/0716/5/07 24/5/07
1/6/0711/6/0719/6/07 27/6/07 5/7/07
SGD THB100 PHP100
KRW100 IDR100
RM appreciates
Source: BNM
Current Account BalanceCurrent Account BalanceCurrent Account BalanceCurrent Account Balance
% of GNP
-15
-10
-5
0
5
10
15
20
25
30
35
95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07f
CAB Servs & Inv. inc. Merchandise
% of GNP
-15
-10
-5
0
5
10
15
20
25
30
35
95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07f
CAB Servs & Inv. inc. Merchandise
current account surplus still sizeable, at 17.8% of GNP in 2006
Foreign ReservesForeign ReservesForeign ReservesForeign 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 short-term external debt
• 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 short-term external debt
0
1
2
3
4
5
6
7
8
9
10
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Jun'070
20
40
60
80
100
120Billions
Months of Retained Imports
Reserves (USD)
0
1
2
3
4
5
6
7
8
9
10
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Jun'070
20
40
60
80
100
120Billions
Months of Retained Imports
Reserves (USD)
Source: BNM
Unemployment RateUnemployment RateUnemployment RateUnemployment Rate• employment rose an average of 3.3%pa with 1.6
million jobs created between 2001-2005• employment rose an average of 3.3%pa with 1.6
million jobs created between 2001-2005
0
2000
4000
6000
8000
10000
96 97 98 99 '00 '01 '02 '03 '04 '05 '06e1
1.5
2
2.5
3
3.5
4Total labour force ('000) Unemployment
0
2000
4000
6000
8000
10000
96 97 98 99 '00 '01 '02 '03 '04 '05 '06e1
1.5
2
2.5
3
3.5
4Total labour force ('000) Unemployment
Source: DOSM
Productivity PerformanceProductivity PerformanceProductivity PerformanceProductivity Performance• favourable productivity growth thanks to continuous efforts
to enhance productivity and high capacity utilisation in both domestic and export-oriented industries
• favourable productivity growth thanks to continuous efforts to enhance productivity and high capacity utilisation in both domestic and export-oriented industries
-15
-10
-5
0
5
10
15
20
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
%
Productivity Growth GDP
-15
-10
-5
0
5
10
15
20
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
%
Productivity Growth GDP
Source: NPC
Malaysia: Total Loan and Malaysia: Total Loan and Deposit GrowthDeposit Growth
Malaysia: Total Loan and Malaysia: Total Loan and Deposit GrowthDeposit Growth
4
6
8
10
12
14
16
18
20
Jan-05Mar-05May-05Jul-05Sep-05Nov-05Jan-06Mar-06May-06
Jul-06Sep-06Nov-06Jan-07Mar-07May-07
% y-o-y
Total Deposit Loans (outstanding)
Malaysia: Loans Approved & Malaysia: Loans Approved & DisbursedDisbursed
Malaysia: Loans Approved & Malaysia: Loans Approved & DisbursedDisbursed
-30-20-10
0102030405060708090
Jan-05Mar-05May-05Jul-05Sep-05Nov-05Jan-06Mar-06May-06
Jul-06Sep-06Nov-06Jan-07Mar-07May-07
% y-o-y
Loans disbursed Loans approved
Household Loans to GDP (Household Loans to GDP (%%))Household Loans to GDP (Household Loans to GDP (%%))
62
0
10
20
30
40
50
60
70
2001 2002 2003 2004 2005 2006
per cent
Household loans to GDP(%) Credit card to GDP(%)
Mortgages to GDP(%) Car loan to GDP(%)
Real Interest Rate Real Interest Rate (%)(%)Real Interest Rate Real Interest Rate (%)(%)
-3
-2
-1
0
1
2
3
4
5
6
Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-05Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06
Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07
Real Interest Rate Inflation 3m Fixed Dep
Inflation
3mFD
NPLs/Total Loans RatioNPLs/Total Loans Ratio& Capital Adequacy Ratio& Capital Adequacy RatioNPLs/Total Loans RatioNPLs/Total Loans Ratio
& Capital Adequacy Ratio& Capital Adequacy Ratio
0
2
4
6
8
10
12
14
16
Jan-05Feb-05Mar-05Apr-05May-05Jun-05Jul-05Aug-05Sep-05Oct-05Nov-05Dec-05Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06
Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07
%
RWCR 3-month arrears 6-month arrears
Malaysia: External DebtMalaysia: External DebtMalaysia: External DebtMalaysia: External Debt
0
50
100
150
200
250
1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q041Q053Q051Q063Q061Q07
Medium & Long-term External Debt
Short-term Debt
RM billion
The The Business Conditions IndexBusiness Conditions Index
(BCI)(BCI)
The The Business Conditions IndexBusiness Conditions Index
(BCI)(BCI)
Business Conditions SurveyBusiness Conditions Surveyon firmer footing
• BCI chalked an impressive 16.6 points to 122.1
• uptick in sales
• pickup in output activities
• higher local orders
• turnaround in export orders70
80
90
100
110
120
130
'00 '01 '02 '03 '04 '05 '06 '07
points
BCI and Quarterly GDP GrowthBCI and Quarterly GDP Growth
-12
-7
-2
3
8
13
'00 '01 '02 '03 '04 '05 '0650
60
70
80
90
100
110
120
130
140%%GDP growth
BCI
Quarter BCI GDP GDP y-o-y q-q
2Q07 122.1
1Q07 105.5 5.3
-1.9
4Q06 107.2 5.7 0.5
3Q06 107.8 6.0 3.9
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
ProductionProduction shifting to higher gear
• 44% increased production, higher than 26% in 1Q07
• output of wood and wood-based 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, non-metallic products, basic metal and metallic products
0
10
20
30
40
50
60
'00 '01 '02 '03 '04 '05 '06 '070
10
20
30
40
50
60
'00 '01 '02 '03 '04 '05 '06 '07
% responded % responded ‘better’‘better’
Capacity UtilisationCapacity Utilisation up a notch
• capacity utilisation averaged 80.4 from the previous reading of 79.6
• industries like paper and paper products, non-metallic products maintained capacity between 81-100%
• chemicals and chemical products, rubber and rubber-based products also shifted to near-full capacity
72
74
76
78
80
82
84
86
'00 '01 '02 '03 '04 '05 '06 '07
0
5
10
15
20
25
30
35
40
C U Rate Investment
72
74
76
78
80
82
84
86
'00 '01 '02 '03 '04 '05 '06 '07
0
5
10
15
20
25
30
35
40
C U Rate Investment
% responding positively
Capital InvestmentCapital Investmentgoing 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
0
10
20
30
40
50
60
'00 '01 '02 '03 '04 '05 '06 '07
Production
Investment
0
10
20
30
40
50
60
'00 '01 '02 '03 '04 '05 '06 '07
Production
Investment
% responding positively
InventoriesInventoriessmooth flow
• 19% reported fatter stockpiles, lower than 27% in previous quarter
• stocks running lower for textiles and apparel and plastics and plastic products
0
5
10
15
20
25
30
35
40
'00 '01 '02 '03 '04 '05 '06 '070
5
10
15
20
25
30
35
40
'00 '01 '02 '03 '04 '05 '06 '07
% responded ‘higher’ % responded ‘higher’ stocksstocks% responded ‘higher’ % responded ‘higher’ stocksstocks
The The Consumer Sentiments IndexConsumer Sentiments Index
(CSI)
The The Consumer Sentiments IndexConsumer Sentiments Index
(CSI)
Consumer Sentiments Index Consumer Sentiments Index (CSI)(CSI)
no let-up in confidenceno let-up in confidence
• CSI rises to 115.9 points in 2Q07, from 104.2 points in 2Q06 and 124.1 in 1Q07
• jobs and incomes lift sentiments
CSCSII
70
80
90
100
110
120
130
140
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '0770
80
90
100
110
120
130
140
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07
COMPONENTS OF COMPONENTS OF CONSUMER SENTIMENTSCONSUMER SENTIMENTS
COMPONENTS OF COMPONENTS OF CONSUMER SENTIMENTSCONSUMER SENTIMENTS
incomes stable in second quarter and expected to pick up in the third quarter
good momentum of employment prospects in coming months
0
5
10
15
20
25
30
35
40
452Q06 1Q07 2Q07
Current income Expected income
ExpectedEmployment
0
5
10
15
20
25
30
35
40
452Q06 1Q07 2Q07
Current income Expected income
ExpectedEmployment
% responded ‘better’
Spending plans high on consumers’ agendaSpending plans
high on consumers’ agenda
personal computers 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
0 2 4 6 8 10 12
House
Car
Furniture
TV
W/Machine
Fridge
PC
Cooker/Oven
2Q06 1Q07 2Q07
0 2 4 6 8 10 12
House
Car
Furniture
TV
W/Machine
Fridge
PC
Cooker/Oven
2Q06 1Q07 2Q07
Inflationary Expectationsa big worry
Inflationary Expectationsa big worry
82% of respondents
frown over higher
prices in the next 6
months, up from 76%
in 1Q07, down from
85% in 2006
anxieties rise in
middle-income group
and eastern region
60
65
70
75
80
85
90
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '0760
65
70
75
80
85
90
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07
BCI, CSI, TEC & GDP GrowthBCI, CSI, TEC & GDP GrowthBCI, CSI, TEC & GDP GrowthBCI, CSI, TEC & GDP Growth
60
70
80
90
100
110
120
130
140
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07
-15
-10
-5
0
5
10
15
BCI CSI TEC-MIER GDP
BCI/CSI GDP%
60
70
80
90
100
110
120
130
140
96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07
-15
-10
-5
0
5
10
15
BCI CSI TEC-MIER GDP
BCI/CSI GDP%
MIER’s MIER’s Sectoral IndicesSectoral IndicesMIER’s MIER’s Sectoral IndicesSectoral Indices
60
70
80
90
100
110
120
130
140
150
2Q01 1Q02 4Q02 3Q03 2Q04 1Q05 4Q05 3Q06 2Q0760
70
80
90
100
110
120
130
140
150
Auto Industry Index Residential Property Index
Retail Trade Index Tourism Market Index
60
70
80
90
100
110
120
130
140
150
2Q01 1Q02 4Q02 3Q03 2Q04 1Q05 4Q05 3Q06 2Q0760
70
80
90
100
110
120
130
140
150
Auto Industry Index Residential Property Index
Retail Trade Index Tourism Market Index
NEAR-TERM OUTLOOKNEAR-TERM OUTLOOKNEAR-TERM OUTLOOKNEAR-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• Real GDP growth • exports of goods and services• imports of goods and services• private investment• public investment• growth by sector• inflation • unemployment
World EconomyWorld EconomyWorld EconomyWorld Economy
3.64.1 4.2
2.8
3.7
4.6
2.53.0
4.0
5.1 4.9 5.1 4.9 4.9
-2
-1
0
1
2
3
4
5
6
95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08
% growth
World GDP USGDP% EU-GDP% JapGDP%
Real GDP GrowthReal GDP GrowthReal GDP GrowthReal 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%)
• 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%)
-7.4
6.1
8.9
0.5
5.4 5.86.8
5 5.9 5.7 5.8
-8
-6
-4
-2
0
2
4
6
8
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07f '08fSource: DOSM, MIER
Exports and ImportsExports and ImportsExports and ImportsExports 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
• 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
-20
-15
-10
-5
0
5
10
15
20
25
30
%
'98 '99 '00 '01 '02 '03 '04 '05 '06e '07f
Exports Imports
Source: DOSM, MIER
Private and Public Private and Public ConsumptionConsumption
Private and Public Private and Public ConsumptionConsumption
• private consumption to stay resilient (‘07:6.6%) though moderating
• consumer sentiments affected by higher living expenses
• private consumption to stay resilient (‘07:6.6%) though moderating
• consumer sentiments affected by higher living expenses
-15
-10
-5
0
5
10
15
20
'98 '99 '00 '01 '02 '03 '04 '05 '06e '07f
% change
Private Public
Source: DOSM, MIER
Private and Public Private and Public InvestmentInvestment
Private and Public Private and Public InvestmentInvestment
• private investment to remain key driver (‘07:10.3%)• expansion in public investment (‘07:11.5%) driven by the 9MP
• private investment to remain key driver (‘07:10.3%)• expansion in public investment (‘07:11.5%) driven by the 9MP
-70
-50
-30
-10
10
30
50
'98 '99 '00 '01 '02 '03 '04 '05 '06 '07f
% change
Private Public
Source: DOSM, MIER
Federal Government Fiscal BalanceFederal Government Fiscal Balance (% of GDP)(% of GDP)
Federal Government Fiscal BalanceFederal Government Fiscal Balance (% of GDP)(% of GDP)
-6.9
-15.6-16.7
-9.9
-6.0-5.7
-10.5
-7.6
-3.6-3.2-2.9-2.0
-0.8
0.2
2.30.8 0.7
2.4
-1.8-3.2
-5.8-5.5-5.6-5.3-4.3-3.8-3.5-3.4
-20
-15
-10
-5
0
5
10
15
198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006e2007f
Fiscal Balance (% of GDP) GDP Growth (%)
%
Growth by SectorGrowth by SectorGrowth by SectorGrowth 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
• 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
-2
-1
0
1
2
3
4
5
6
7
8
Agriculture Mining Manufacturing Construction Services
% growth '06 '07f '08f
Source: DOSM, MIER
Inflation and UnemploymentInflation and Unemployment
• inflation pressures to moderate (‘07:2.4%) • unemployment to remain low (‘07:3.5%)• inflation pressures to moderate (‘07:2.4%) • unemployment to remain low (‘07:3.5%)
0
1
2
3
4
5
6
'98 '99 '00 '01 '02 '03 '04 '05 '06e '07f
%
Inflation Unemployment
Source: DOSM, MIER
Europe’s & Japan’s growth falter
DOWNSIDE RISKSDOWNSIDE RISKS
DownsidDownsidee
RisksRisks
Global imbalance worsening
US economy slower than 2.1% in ‘07
Oil price overshooting
Terrorist threatsrising
ISSUES & CONCERNSISSUES & CONCERNSISSUES & CONCERNSISSUES & 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
• 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
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