Sunday 19 February 2017

The Star Says : Women You Mafan. Rain Of The Scarecrow

Is the massive hit single by John Cougar Mellencamp from the award winning scarecrow album about economic hardship in RED America.

Without, spelling it, the Star says Women You Mafan (in basic Chinese translation, it means We Have Trouble).

Read below, the Star for Malaysia's version on rain of the scarecrow :

THERE is every reason to believe that the Malaysian economy will still be under pressure this year despite the acceleration in growth in the last quarter of 2016 and the expected improvement from the second half of this year.

At best, Malaysians can expect the economy to grow at the same pace as last year.

For one thing, sentiment on the stock exchange remains lacklustre, with the benchmark FBM KLCI still trading within a tight range.

A technical analyst tells StarBizWeek that the index is still “trapped” and not able to break out of the key resistance level of 1,730 points, in comparison with improving regional equity markets.

Investor sentiment is a good gauge because stock indices lead economic indicators such as gross domestic product (GDP) data by as much as six months. Another gauge in which to measure the economy is the ringgit, which remains under pressure despite the rebound in global oil prices and the wider current account surplus. Clearly investors are holding back. The Malaysian economy as measured by GDP has slowed down two years in a row.

Some argue that corporate earnings will improve this year after three consecutive years of falling profits largely because of rising commodity prices, which is traded in the strong US dollar and where a weak ringgit will translate to better foreign-exchange gains.

More support: Wiranto says private consumption will remain supported by labour market strength and fiscal support measures.

Will improving corporate earnings mean better sentiment on the ground? Perhaps, but it will be very gradual given that the Malaysian Institute of Economic Research’s (Mier) indices measuring consumer and business sentiments remain well below the 100-point threshold, indicating sentiments continue to be fragile. For the fourth quarter, the Mier’s consumer sentiments index fell to 69.8 while the business conditions index dropped to 81.2.

The Mier cites unfavourable finances, subdued wages, a flat job outlook and rising inflation as reasons why consumers are increasingly edgy. While these factors have not, so far, translated into a big drop in private consumption, many economists remain wary although Malaysian consumers have weathered the slowdown well.

They point to the high household debt as reasons for their caution. Consumers cannot continue to be the main pillar of support to the economy, at least not without seeing some gains trickling down from an improving economy. This is where higher wages come in but employers are not expected to be generous with wage increments or bonuses based on last year’s earnings.