MANU Bhaskaran, a respected commentator on Asian economic affairs, wrote recently on how the economies of two of our closest neighbours would fare.
The Singapore-based partner at Centennial Asia Advisors, a policy advisory group based in Washington, DC, compared the economies of Singapore and Indonesia. The outlook for both, according to him, is poles apart.
In Singapore, the softening labour market is indicative of a fragile economy, he said.
Lay-offs are at a six-year high, growth in total employment is the lowest since 2003 and older employees are finding it harder to be re-hired after being made redundant and could also be facing obsolescence, he wrote.
(A big chunk of the job losses is in banking, marine and offshore industries, areas where Singapore has long dominated.)
Manu said the softening job market could add to economic woes, particularly for the household sector.
Compare that with Indonesia, whose economy could grow 5.2-5.6 per cent in 2016, according to his own forecast. This is well above the International Monetary Fund (IMF) estimate of 4.9 per cent for 2016.
Manu said the destabilising risks identified by the IMF — global financial volatility, a slowdown in emerging markets and lower commodity prices — will pose a downside risk to Indonesia’s growth only if monetary policy is mismanaged and if the Jokowi administration does not deliver on supply-side reforms.
“We, however, believe that the current momentum in Indonesian policy-making is improving and will help accelerate economic growth,” he said.
How are things in Malaysia? Based on official estimates, the economy is likely to post a credible 4 to 4.5 per cent growth in 2016. That means we will be among the fastest-growing economies in this region.
The 4-4.5 per cent growth is considered commendable given the prolonged oil and commodity slump, global economic uncertainty and financial volatility.
What are short- to medium-term risks to our economy? The outgoing Bank Negara Malaysia governor, Tan Sri Dr Zeti Akhtar Aziz, put it simply: the level of our indebtedness.
The current debt level is at a manageable level now, she told a group of editors last week. But if we take on more and more debt (by households, corporate and public sectors), it might pose a future risk.
Household debts are currently at a worrying level of 89.1 per cent of the gross domestic product. However, 61.4 per cent of household debts are secured by property and securities.
But the central bank notes that there have been higher delinquencies in the compact car hire purchase and personal financing segments.
It warns that non-banking financial institutions, such as cooperatives, should not start to ease their lending rules. It will be status quo for now.
A veteran newsman, A Jalil Hamid believes that a good journalist should be curious and sceptical at the same time