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Global economy: Is the worst behind us?

The first quarter of 2009 has since passed with mostly plenty of noises about economic crisis, recession, technical recession and the inevitable consequences. It was

Brighter state of maters

A slightly bright note comes from the country that has been pivotal in economic damages all over the globe, the United States.

It’s top officials recently offered reassurances that the worst of the economic downturn is likely to be over, helped by unprecedented efforts to keep credit flowing, though the recovery will be slow.

Media reports cited vice chairman of the country’s Federal Reserve (Fed), Donald Kohn and New York Fed chief William Dudley as saying that measures taken by the U.S. central bank are indeed working to help revive the economy.

In addition to that, Paul Volcker, a senior economic adviser to the Obama administration and a former Fed chairman himself, said the rate of the economy’s decline is set to slow.

Another good sign from the land of stripes and stars comes from its consumers. Reports showed that US consumers have shown more confidence in its economy. It cited a Reuters/University of Michigan Surveys of Consumer, which said its preliminary April reading of consumer sentiment rose to a level of 61.9, up from 57.3 in March, and was the highest since 70.3 recorded in September.

Relief for the Brits

Across the Atlantic ocean, the United Kingdom are beginning to feel the lessening of the strain too.

According to media reports, the Confederation of British Industry (CBI) was quoted as saying that the recession will ease in the second quarter of this year, although it warned that the recovery will be "slow and fragile."

“The British economy went into its first recession since the early 1990s in the last three months of 2008, bringing higher unemployment, lower house prices and falling industrial output,” the report said.

It also quoted CBI Director-General Richard Lambert who said aggressive rate cuts, the weaker pound, low inflation and the global fiscal stimulus would slow the decline in Britain this year.

"There are a few tentative signs that the steepest phase of the recession is now behind us," he said in a statement. "The recession is by no means over, but we see a return to very weak growth by spring 2010."

Easing up in Japan

Over in Asia, the most affected country, Japan, has also shown some sign of possible slowing down of economic decline.

According to a Bloomberg report, Japan’s export slump slowed in March, ending a four-month streak of record drops and adding to signs the recession may have started to ease.

It quoted Japan’s Finance Ministry as saying that its overseas shipments slumped 45.6 percent from a year earlier, compared with February’s unprecedented 49.4 percent plunge. Economists predicted a 46.4 percent drop.

The drop in shipments to the U.S. and China, Japan’s two largest markets, also slowed.

Good news for home?

Having seen some good lights globally, what are the chances of Malaysia making recovery soon?

Well, chances are strong it seems, at least according to the Bank Negara. Its governor Tan Sri Dr Zeti Akhtar Aziz said that the economy should perform better in the second half of the year as the fiscal stimulus packages are implemented and the effects of the supportive monetary environment kick in.

“The first quarter was very much affected by external economic contraction taking place, our exports numbers have shown that,” she was quoted in a media report.

Zeti added that domestic economy was still growing and “this is what we need to sustain the country’s economy”.

In fact, the one industry here that was hit the worst, manufacturing, is also showing some sings of recovery.

Federation of Malaysian Manufacturers (FMM) president Datuk Mustafa Mansur recently informed the media that there are signs demand in the manufacturing sector has picked up in the last two months, but it is too early to tell whether the sector has recovered

“The outlook for this year is still uncertain; it is too early to say,” he told the press. “The figures in February and March were very encouraging. It has shown some improvement although the figures were still negative,” he said after a press conference to launch a trade exhibition in conjunction with the 6th World Chamber Congress (WCC).

If the improving trend continued, “then it is like showing signs of recovery,” he added.

Recovery is slow, but signs are indicating that the worst maybe over. Let’s see what happens the next few quarters.

(Source: Jobsdb Malaysia)