AmBank: Malaysia May Slide Into Recession in Q1

By Zaidi Isham Ismail
Published: 2009/03/10

Malaysia may slide into an economic recession in the current quarter, as falling global demand for manufactured goods continue to hit already slumping exports.

AmBank Group chairman Tan Sri Azman Hashim said many are optimistic of a recovery but things can also get worse and the global downturn may last until 2011."The whole world is affected by slowing export demand.

To recover a lot depends on the US economy ... when it recovers, then the rest of the world will follow suit," Azman told Business Times at AmBank's headquarters in Kuala Lumpur recently.

Azman said the export trend has already declined 20-30 per cent, with car companies reporting up to 40 per cent sales fall and steelmakers revenue dipping as much as 60 per cent."Companies stockpile of finished goods are full at the godowns ... but it's not just confined to Malaysia but also the rest of the world," he added.

It was reported recently that the economy registered a growth of 0.1 per cent for the last quarter of 2008, fuelling worries of a recession.Malaysian Institute of Economic Research said on Tuesday that Malaysia stands on the brink of recession as falling demand hits exports and manufacturing with growth expected to reach just 0.5 per cent for the year.

Second Finance Minister Tan Sri Nor Mohamed Yakcop, however, said Malaysia is not facing any technical recession or two consecutive quarters of negative.Azman said it would be good for the economy to prepare for the longer period than the short term in case the downturn lengthens.

He added that when the US and China slows down more compared with other economic giants, the rest of the world such as Asia and other regions will start to lose momentum."China, however, has got more chance to recover than the US because its style of government is of a single structure and quick to announce, implement and spend.

Azman said some Malaysian companies are fortunate because cost areas such as raw material and oil and gas prices have softened, easing their burden.