Credit Suisse cuts M’sia GDP forecast

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By JEEVA ARULAMPALAM jeeva@thestar.com.my

It says Asian growth set to slow more sharply

PETALING JAYA: Credit Suisse AG has cut its real gross domestic product (GDP) 2011 growth forecast for Malaysia to 4.6% from 5.3%, as the Western world is teetering on the brink of recession and large parts of Asia remain highly susceptible to growth developments in the United States and Europe.

It also cut its 2011 GDP forecast for other Asian economies such as Thailand, Hong Kong and South Korea.

In an economics research yesterday, Credit Suisse said Asian growth was set to slow more sharply over the coming months.

 “With the fiscal support provided during the global financial crisis removed and the lagged effects of higher interest rates working their way through, we had expected the Asian economies to soften from second quarter of 2011.

“Now that the Western world is teetering on the brink of recession we believe the outlook has dimmed further,” it said.

In addition to cutting its GDP forecast for this year, Credit Suisse trimmed next year's forecast to 4.8% from 5.8% previously. The new 2011 and 2012 GDP forecasts imply annualised sequential growth rates of an average 3.5% in the second half of this year and 5.5% for next year.

“What has kept us from cutting our growth forecasts further is the likely support from domestic demand. We think more investments from the Economic Transformation Programme (ETP) should come onstream, especially in the oil and gas sector which benefited from high oil prices.

“Also, the Government has underspent its budget in the first half and we expect it to increase spending in the second half to meet its target,” it said.

It added that some factors that exacerbated the slowdown in the second quarter were likely to be temporary but Credit Suisse did not expect domestic demand to be shielded from a further weakening in external demand.

“Moreover, Malaysia's growth is vulnerable to a collapse in commodity prices if this were to happen,” it said.

In the report, Credit Suisse said it expected Bank Negara to keep the overnight policy rate unchanged at 3% until the end of next year (it previously expected one 25 basis points hike).

With the global growth outlook highly uncertain and inflation slowing, it suspects that the central bank will be in no hurry to raise the overnight policy rate further. However, a severe global recession could see rates being cut.

“In contrast, we think there is little scope for the Government to stimulate the economy through fiscal policies above and beyond the existing high deficits they projected (5.4% of GDP for 2011).

“Even as things stand now, Malaysia would probably need to undertake significant fiscal adjustments over the next decade if it wants to bring its relatively high debt to GDP ratio down.

“A prolonged weakness in growth would increase the risk that the Government would further delay its plan to cut subsidies and raise the consumption tax,” it said.

Bank Negara is maintaining its GDP forecast of 5% to 6% for the full year as it expects strong domestic demand and ETP projects to fuel economic growth in second half of the year. Malaysia's second-quarter GDP moderated to 4%, compared with 4.9% in first quarter, dampened by a slowdown in the manufacturing sector and weaker external environment.

AmResearch Sdn Bhd, in a report last week, said that while it expected a full-year 5% growth rate to be achieved given the current climate, possible trigger points for a downgrade included an adverse impact of a very large drop in crude oil prices and any further delay in the ETP projects.

“As a net exporter of oil, Malaysia still relies heavily on crude oil in terms of generating income for the country. As long as the full-year average lies between US$85 and US$90 per barrel, all is well and within budget.

“On a positive front, a sharp fall in crude oil may well mean a reduction in total subsidies spent by the Government. The net impact will, however, be detrimental to the Government's coffers and overall growth,” AmResearch director of economic research Manokaran Mottain said in his report.

For latest GDP reports from the Statistics Department click here  

Chinese Moon Probe Reaches New Deep Space Destination

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SPACE.com Staff

An artist's interpretation of the China's Chang'e 1 lunar orbiter, which launched in October 2007 and ended its mission by crashing into the moon on March 1, 2009.CREDIT: CNSA.

Several months after departing from the moon, a Chinese spacecraft has arrived at a new destination about 930,000 miles (1.5 million kilometers) from Earth, according to news reports in China.

The Chang'e 2 moon probe arrived at Lagrange Point 2 (L2) — a place where the gravity of Earth and the sun roughly balance out — on Aug. 25, the Xinhua news service reported Tuesday (Aug. 30). Chang'e 2 had left lunar orbit in early June to head for deeper space.

China is now the world's third nation or agency to put a probe in L2, one of five spots in near-Earth space that serve as a sort of parking lot for spacecraft to hover without being pulled toward any planetary body. NASA and the European Space Agency have also accomplished the feat.


Officials from China's State Administration of Science, Technology and Industry for National Defence (SASTIND) said that Chang'e 2 will carry out exploration activities around L2 over the coming year, Xinhua reported. SASTIND also plans to launch two "measure and control stations" into outer space by the end of 2012, and Chang'e 2 will be used to test the stations' functionality at that time.

Chang'e 2 launched on Oct. 1, 2010, and arrived in lunar orbit five days later. The probe is the second step in China's three-phase moon exploration program, which includes a series of unmanned missions to explore the lunar surface. [Photos: Our Changing Moon]

This photo, taken by China's Chang'e 2 lunar probe in October 2010, shows a crater in the moon's Bay of Rainbows. The image is one of the first released to the public by China's space agency.
CREDIT: China Lunar Exploration Program [Full Story] View full size image

During its time orbiting the moon, Chang'e 2 took a lot of high-resolution photos to help plan out future missions, which will actually drop hardware onto Earth's nearest neighbor. China is aiming to launch a moon rover around 2012, and another rover will land on the moon and return to Earth with lunar samples around 2017, according to Xinhua.

Chang'e 2 finished up its duties around the moon in April but had enough fuel left over that officials decided to send the probe off into deeper space.

The spacecraft's predecessor, Chang'e 1, launched in October 2007 and conducted a 16-month moon observation mission, after which it crash-landed on the lunar surface by design in March 2009.The Chang'e probes are named after the nation's mythical moon goddess.

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It's Education, Stupid !

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It’s that time of year when I spend much of my time reading the books that have been nominated for the FT/Goldman Sachs Business Book of the Year. It’s a judging duty that is both a pleasure and a pain. The pain is the sheer amount of time it takes to wade through thousands of pages.  The pleasure is reading books that would not necessarily cross my path. This year, as with the last, many of these books are written by economists and, understandably, focus on the state of the world economy. It is interesting to read how many agree that education and training are crucial to long-term economic success, for individuals, companies and countries. I made a similar argument in my most recent book The Shift, focusing in particular on the types of education and training that create specialization. Here are the two reasons why it has never been so critical to become educated:

• Rampaging connectivity – will see at least five billion people around the world using some form of mobile device to download information, access knowledge and coach and teach each other. Some will have the intellectual capacity and motivation to really make something of this extraordinary opportunity, wherever they happen to be born. These people will want to join the global talent pool and, if possible, migrate to creative and vibrant cities. By doing so, this vast crowd of talented people will increasingly compete with each other, continuously upping the stakes for what it takes to succeed.

• The technological revolution – brought mobile devices to billions, and is now transforming how work gets done. Robots are taking the place of unskilled and semi-skilled workers, while business analytics, modelling and collaborative technologies are taking away much of what has traditionally been the role of the middle manager. However, while technology may be replacing the mechanical aspects of work, it is not replacing the more complex, skilled work that involves creativity and innovation. That’s the high value piece that remains, and it is once that requires education and training. 

As high quality education becomes more of a premium, we can expect the sector to begin to transform itself even more rapidly. Just what this transformation will look like is difficult to predict with accuracy. But here are two emerging trends that I believe will shape it over the coming decades:

The Gutenberg Project: the race is on to digitalise many of the books and articles of the world, while the professors of academic institutions such as MIT are making their key lectures available on the web. Combined with hyper connectivity and the potentially global reach of the Cloud, this means that knowledge and wisdom will be available to anyone with access to the Internet. This could see the development of new ways of educating that leapfrog those of normal educational institutions, creating more fluid, virtual and vibrant networks of learning. 

Virtual Schools and Universities: there has been a great deal of research over the last decade focusing on how people learn. This has looked at e-learning, face-to-face teaching and over-the-phone coaching. What has become clear is that none of these on their own are the best; it’s the combination of all three that has the greatest impact. This is important for educational strategies since at least two of these processes are virtual, and F2F can largely be substituted by video conferencing. I saw the speed of this transformation recently when I visited UOC (Universitat Oberta de Catalunya) in Barcelona. Its sleek headquarters are the hub of a virtual university that has 60,000 students (and growing) taught by a faculty of over 3,000 virtual educators. Using simulations, games and collaborative environments, the institution is building deep expertise in supporting education across the world.

Some have argued that, of all the institutional forms, education has changed least over the past few decades. It looks as if the need for deeper knowledge and rapid advances in learning technologies may change all that.

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