Monday, April 12, 2010

Hold On To Your Hats…

…it’ll be a better year than you think. Seems I’m not the only one who thinks GDP growth this year will be pretty good. HSBC thinks Malaysia will hit 7.3% in 2010, while JP Morgan forecasts a higher 7.8%.

Part of that is of course the sheer depth of the recession – GDP dropped a full RM70 billion in nominal terms – and the resulting base effect on this year’s output. I’ve already explained my reasoning in this post, but to summarise, I think a fairly full recovery in trade and consumption is in the offing, which means that the economy is likely to return to its previous growth path. That implies that growth this year will be much faster than normal at over 7%.

Having said that, don’t buy too much into this year’s growth as the start of a new trend – it isn’t.

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