Do Malaysian Economists Lack Chicken Sense?
by Harun Rashid
Sep 19, 2001
What is it that prevents a professional economist in Malaysia from calling a spade a spade? The figures are right under the nose. But instead of looking soberly at them, they gaze off as toward a distant vision, then, glassy-eyed, make some totally far-fetched prophesy.
Recently there was considerable toe-dancing around the issue of a 'technical' recession. The government issued a garbled GDP report suggesting the country had just barely avoided pie in the face, and now was on the high road to greater growth and renewed fortune.
This posturing was so entertaining it was the occasion for an article (The Not-So-Hidden Recession). At the time, it seemed necessary to rein in what appeared an excessive zeal to look growth worthy. False optimism is the mother's milk of politicians and their economists. Only final mortification brings out a confession, stretched thin as a strand of hair in the noodles.
There are less than two weeks left in the third quarter, and the projections are beginning to spin out. All will be well, we are again told, and if not, it will be those other twin towers which are at fault. They are the new scapegoat. Like the ghostly Malaysian Muslim extremists, the truth of the matter is hard to pin down, yet easy to put the blame on (and pen in). Now days in Malaysia every economic nuance is to be explained as a concomitant to mischief made by misguided Muslims. As usual, no real evidence is necessary.
A few months ago, we were assured that Malaysia was capable of an independent path. We were led to believe America could sink into the sea, and Malaysia would be only mildly affected, thanks to a strong domestic demand which will continue in spite of external factors. The leadership of the prime minister, with his vision and foresight, was to be admired, especially his resolution to maintain the ringgit peg against those you-know-what's.
But today the tune has changed, along with the lyrics. Now our economic fate is "closely linked" to that of the US, according to the latest edict of the prime minister. Events in the US threaten the earlier rosy forecasts of GDP growth of now 8, now 5, now 2, now ... oh, oh.
What is this thing called 'negative growth'? Growth is growth, which has always been considered a positive change. But now we hear it can also be negative. This is the silliest of euphemisms. It is a plain oxymoron. When a second number is less, the change is negative. It is not growth. That term is reserved for a positive change. Every chicken knows that.
What is wrong with an inevitable downturn in the business cycle? Can't politicians and economists admit that such things are possible? Is there some stigma or professional stain which attaches to a frank assessment of the facts? In Malaysia even mathematics is warped to fit political ends. In any scale of national development, this indicates a fading potential, as in Retrograde 2020.
The citizen who entrusts these important matters to trained and experienced economists expects a decent answer now and again. The present song and dance around the economy is pure stagecraft. As any barnyard chicken can see, the year 2001 is not going to match the year 2000, and that is that. Yet no one in official circles is willing to admit it.
Here is what the chicken sees. The total GDP for 2000 was RM340.7 billion, an average of RM85.18 billion per quarter. The first two quarters of 2001 are RM82.05 billion and RM82.60 billion, for an average of RM82.3 billion per quarter.
If this same pace of business activity can be maintained, the total for 2001 will be RM329.3 billion. This is a decline from the year 2000 of RM11.4 billion (-3.34%). One must keep in mind that to limit the downturn to this figure of -3.34% the average GDP for the 3Q and 4Q must remain at the present level.
Yet the government tells us that the year 2001 will not be less than 2000. This means the 3Q and 4Q must provide robust figures, indeed. The first half of the year totals RM164.66 billion, so to equal the 2000 level, we must add another RM176.05 billion in the second half of the year. That is an average of RM88.02 billion in both the 3rd and 4Q.
We have been led to expect that the 3Q results will be comparable to the 2Q, or around RM82 billion. This produces a shortfall from the required average of about RM6 billion. But now it appears even this expectation of a 3Q comparable to the 2Q may be too high. However, assuming the 3Q GDP does approximate that of the 1Q and 2Q, the year-to-date total for 2001 at the end of the 3Q will be RM246.9 billion.
That means, in order for 2001 to match the year 2000 results, the burden on the last quarter amounts to RM93.81 billion. The chicken sees this as unrealistic. When, if ever, did Malaysia have a 4Q (or any Q) so high? The times, they do not look so good. Yet these are the numbers which must be met to justify the projections of the economists. There is a limit to what the public will swallow.
Perhaps we should employ a chicken.