Is Malaysia already in recession? What can we do now?

What did the government say?
Nov 28, 2008 – Malaysia to escape recession, says Zeti
MALAYSIA is likely to escape a recession next year and post a modest growth despite the global financial crisis due to strong consumer demand and public spending, the central bank said.

Jan 9, 2009 – Malaysia Not In Recession Now, Says PM
Malaysia is not facing a recession now despite the global financial meltdown that has badly hit the United States and Europe, Prime Minister Datuk Seri Abdullah Ahmad Badawi said.

Jan 10, 2009 – Malaysia won’t go into recession, says Nor Mohamed
Yet another official is talking…

What did the union and private sector say?
Nov 26, 2008 – Job Losses Feared as Recession Bites
The global economic slowdown is slowly creeping onto Malaysian shores leaving many worried about the impact it will have on workers.

Jan 13, 2009 – Sell Malaysian bank stocks: Citigroup
Citigroup cut its growth forecast for Malaysia to 0.5 per cent for 2009 from 3.1 per cent on lower exports, according to the report. Citigroup’s forecast is lower than the official estimate of 3.5 per cent for economic growth in 2009.

Why governments hate to let us know that we are in recession?
Governments hate downturns. That’s because voters tend to prefer good times to hard times, unsurprisingly. A government that presides over house price growth and full employment comes in for plaudits, regardless of how that growth was achieved.

The basic ideas behind how to run an economy for a long time have been rooted in Keynesian economics. The idea is that governments can take an active role in managing the economy through various tools, including setting the interest rate. You try to make sure the economy doesn’t overheat during the good times, and in the hard times, you make money a bit more available, and maybe increase public spending too, to compensate for the downturn in the private sector and “stimulate” the economy.

The government can’t stop the recession – but it can make it worse
Does it work? Who knows? Because while it sounds good in theory, what you actually get is a government that keeps pressing the “stimulate” button for as long as it can get away with it.

With the coffers empty, there really is very little any government can now do to stand in the way of this downturn. But that won’t stop them from trying. They won’t make things any better. But as a long and grim history of price controls, currency market interventions, protectionist laws, and good old Fannie and Freddie (so-called “government-linked companies”) in US demonstrate, they might just make things worse.

If it really has to, the Government could still do something – instead of wasting tax payers’ money on inefficient and yet corruption-breeding projects or “VALUEable CAPital injection” (oops.. sorry for the spelling mistake), it could cut taxes. That would put more money in people’s pockets, which they could use as they wished.

But this won’t happen. Rather we’ll get a load of high-profile, high-spending, wasteful initiatives that will drive us deeper into the hole we’re in.

What can we do now?
Some good businesses during hard time – answer to uncertainty: feng shui & fortune teller.

Other more-practical ideas: buying essential items in bulks at hypermarts, sharing for saving, recycling, reading financial blogs, etc.

Real estate investment? Why not?
Advice from guru – hold onto gold, income-producing real estate, oil wells, and stocks when pessimism prevails.

Today’s depressed real estate market is the best time to start buying houses, even if credit is tight. Robert Kiyosaki and his wife accumulated income-producing properties when the economy stayed down from 1987 to 1995, even though they were strapped for cash and bankers did not want to lend to small investors.

Finally, and most importantly – “if you do not know what you are doing, no asset can make you rich. Ultimately, what makes you rich is your financial intelligence. Your greatest asset is your brain — so take care of it and protect it from bad advice.”