DIFFICULT TIME AHEAD FOR MALAYSIA

Before we dive into the Malaysia's economy, we shall look at the performance of other countries that directly influence our financial state. America, albeit the growth turmoil had recovered but it happened at extremely slow pace. The US Gross Domestic Product (GDP) has slowed from 2.4% in 2010 to 2% in 2011 and 1.6% in the first half of 2012. The economist forecast only 1.5% growth for this year. If the trend continues, the economist warned that US shall fall back into recession.

As for the Europe, the 17 nation euro zone manage to grow at about 0.3% in the second quarter after 18 months contractions, thanks to the revival of German. China, our largest market has its GDP fallen to 7.6% in the first half of this year. Singapore forecast the growth between 2.5% to 3.5% for this year. Last year Singapore's GDP stands by only 1.3%.

Recently the Ringgit lost as much as 0.4% to 3.272 per US dollar, its weakest since June 2010. It is estimated that it could reach to 3.3. against the dollar over the next six months. With slower import from our counterparts, Malaysia's earnings shall decreases and it will significantly affecting the economy due to the slower demand. The recent subsidies rationalisation may help the government to cope with the account deficits albeit small amount for the overall effect. The government need to act fast by not just focusing on the savings but also finding a new market abroad and revenues to cushion the impact.