How will the economic growth in Malaysia look like in 2017?
Hello everyone 🙂 Just got back from the long Christmas break. Hope you all had a wonderful holiday with your loved ones too.
A couple of concerns hit me this morning when I saw a headline in The Star online stating Ringgit opened lower against the USD. Omg! I wondered with the current gloomy situation, what could possibly be in store for us next year, 2017? I mean, what challenges will we and the Malaysian banks be facing?
Surfing further, I stumbled upon another post by Yvonne and Gurmeet Kaur, titled, “challenging times for banks amid global economic uncertainties”. (nice one gals!)
Here’s what they wrote (bolded blue pieces are my opinion)…
While it will remain challenging for banks amid the global economic uncertainty, bankers are optimistic that the sector will see improved profitability next year after experiencing flat growth this year.
They expected the improvement in performance to be largely driven by stronger domestic economic growth coupled with continued cost-saving initiatives launched by financial institutions last year.
AMMB Holdings Bhd group CEO Datuk Sulaiman Mohd Tahir expected the banking sector to chart an overall loan growth of around 5% to 6% in 2017 on the back of continued domestic economic performance.
“Core earnings are likely to grow by 6.8% year-on-year in 2017 following flat growth in 2016, largely driven by lower provisions while being supported by top-line growth. Additionally, operating expenses are envisaged to be well-controlled next year and to some extent, supported by savings from cost initiatives,” he told StarBiz via email.
Loan growth of 5%-6%? May I ask him what were the real numbers of loan growth this year 2016 please! Real numbers, not puffed up ones.
Then he said core earnings of 6.8% y-o-y? What B.S. (sorry for the swearing) And look at the reasons they are giving in the interview “bla bla bla…and to some extent, supported by savings from cost initiatives.” We all know what this means. I mean just look at the number of retrenched staff last couple of months this year and you know exactly what they mean when they say, “…savings from cost initiatives.”
In fact, I was about to quit reading that article, but I quickly skimmed through and noticed a caption by Tengku Zafrul and his take on the matter was rather interesting. CIMB Group Holdings Bhd group chief executive, Tengku Datuk Seri Zafrul Aziz said…
“CIMB has seen its cost-to-income ratio reduce from 59.1% in 2014 to 54.6% as at Q316 helped by various cost-cutting initiates while its Common Equity Tier 1 ratio, a measure of a bank’s strength, has also strengthened from 10.1% in 2014 to 10.9% during the same period.
That’s honesty (to an extent).
“It is still too early to get clarity on the real and full impact of Brexit, the US presidential transition, and various geopolitical events across Asean and how these will impact the economic growth and banking sector in this region,” Zafrul said in his email to StarBiz.
True! And not to mention our own 1MDB issue which has seen no light to resolve, yet.
He cautioned that a stronger US dollar, higher US interest rates, the possibility of increased US protectionism and the continued slowdown in China’s economy were considered as downside risks heading into 2017.
So, without getting into too much details and to sum this post up, here’s what else I think…
We need to wait and see how Trump carries out his election promises. If he pulls USA out of the Trans Pacific Partnership agreement and presses on changing some policies in Nafta, we are in trouble! Then the whole Malaysian banking and economic landscape will likely suffer, even further. We are talking millions and probably billions of Ringgit in trade loss here, folks!
Immaterial of how the economic growth in Malaysia plays out in 2017, we ordinary, hard-working, honest citizens will have to face the brunt. We are going to be seeing some rough tides ahead. Be prepared!
- Job’s will be harder to come by.
- Ringgit’s value will probably diminish further.
- FDI’s (foreign direct investments) will be slow to almost nill.
- Malaysian’s inflation will rise, undoubtedly.
- Large companies will start pulling out
- Thousands will go wasted for the upcoming general elections in 2017
…and not to mention the socio economic issues that will most likely rise as an after-effect of a slow brutalized economy.
Keep expenditure low, for time being at least. Cut costs wherever you can and try to safe as much as possible. Also, if you have lots of cash stacked in FDs (fixed deposit) or EPF, you may want to rethink of placing a portion of it, if not all, elsewhere. Wise people said, “don’t put all your eggs in one basket!”
Try to invest your money into more stable economies around Asia too, ie. Australia or Singapore are great places to start. Invests in low priced-high yield properties, buy or trade in foreign currency. Also don’t forget to look into Bitcoin. It’s the new upcoming currency of the Internet that’s turned many important heads. Want to know how to invest in Bitcoins? Give me a buzz and I’ll tell you how I’m doing it, the legit way 🙂
Do you have any other suggestions? Please share your thoughts with me.