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Economic Outlook for 2010

AS people around the globe get ready for countdown to usher in the New Year, many economists predict tough times ahead in 2010.

Carl Weinberg, the chief economist of High Frequency Economics, is reported to have said in Washington in the final days of 2009 that he has “grave doubts” about the capacity of any of the top industrialized nations to grow much in 2010, if at all.

“We do not know of a single G7 economy that will be able to grow next year without substantial incremental fiscal stimulus,” he said in an AFP report.

Others argue that the global economic problems, instead of being solved, have been shifted by the government recues, with the exit strategy unclear.

Globally, the International Monetary Fund (IMF) projected that growth would be 3.1 per cent in 2010, after an estimated 1.1 per cent global contraction in 2009, the worst since World War II.

Morgan Stanley economist Joachim Fels and associates said that the economies of the Group of 10 would see “creditless recoveries” where banks are reluctant to lend and predicted “a jobless G10 recovery” with unemployment still high in the United States, Europe and Japan.

Outlook for Malaysia

Datuk Dr. Mohamed Ariff Abdul Kareem, the executive director of the Malaysian Institute of Economic Research (MIER), says, “The recovery that we see in Malaysia is very fragile.”

Malaysia has to keep its interest rates relatively low to stimulate both consumption and investment, he added.

He said the country’s growth might reach its peak early and decelerate thereafter should the United States run into a double dip contraction in the first half of 2010, in which case Malaysia would have to put in some kind of stimulus package.

“There are already indications of the volatility,” he said in a report by Bernama, adding that Japan had shown some kind of deceleration after a positive growth in the third quarter of 2009.

“In a way, this is a difficult time. I don’t think now is a cause for celebration. We are out of recession but we are going to be stuck in a slow, sluggish growth for at least two more years,” he said.