Is 2018 a Good Year?

There are several predictions for 2018. Some are more ominous than others – the world will end,  nuclear war, earthquakes, tsunamis and many more depressing thoughts.

How about the economy? Quite frankly, if the world is going to end then there is no need for any forecast. Just prepare for the worst! And here I could end this week’s entry.

But we live on hope and it is still the season of joy, peace and hope. In that spirit, I will try to gather the future for 2018. Global GDP is forecast to grow between 3.7% - 4.0%. For Malaysia, the consensus seems to suggest a range of 5.0% - 5.5%. Will that happen? Yes, if the following things hold:

·       domestic demand is strong;

·       inflation is below 3.5%;

·       oil prices remain in the current range;

·       fiscal deficit as a percentage of GDP improves further;

·       household debt will not implode; and

·       external position remains favourable

The bigger risk for Malaysia is political. The GE 14, trade impact with Trump’s “US First” policy, escalation of tensions between U.S. and North Korea and instability in the Middle East. Geopolitical risks far outweigh other considerations. And there is a chance of a recession every 10 years.

But let’s hope for better things and “hope is like the sun – if you only believe in it when you see it, you will never make it through the night” (Holdo, quoting Leia, from “Star Wars: The Last Jedi”).

May God bless Malaysia! And a very Happy New Year!

                                             Picture source: https://www.vecteezy.com/