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theSun | MONDAY DECEMBER 15 2008 15

speak up!

Meanwhile, the Rhineland- insuring debt against the risk of Even more dramatic was the

Unique challenges Westphalia Institute for Economic

Research said Germany could
find itself in the worst recession
in its history. In its latest report,
the institute said Germany’s
gross domestic product will turn
default. While CDS isn’t the sole
determinant of risks of sovereign
and corporate debt, the higher
spread for Britain supports
those who claim the country is
borrowing more than markets will
plunge in China’s imports – down
17.9% in November from a year
earlier. The erosion of imports
indicates weaker domestic demand
while the pullback in export orders
has wreaked considerable havoc

in 2009
negative by 2% next year – a tolerate, analysts said. among China’s manufacturers.
marked contrast from its forecast of More worrying is the perception Meanwhile, the global
0.7% positive growth announced in Britain is mortgaging its future slowdown has plunged India’s
September. in a possibly pointless attempt to high-tech companies and
Additionally, the Munich-based reflate an economy that needs to outsourcing firms into negative
Ifo Institute for Economic Research be downsized after a long credit- territory. Many of India’s
A SLEW of news trillion) – almost says Germany will remain in fuelled boom, they add. outsourcing companies like Infosys
reports in disparate matching the US$455 recession until 2010. If the outlook The International Herald derive two-thirds of their business
countries, all released billion (RM1.6 trillion) for Germany, the anchor for Tribune reported another quirk from the US while one-third comes
last week, underscore deficit for the entire the eurozone, is bleak, that for – investors bought US$30 billion from financial institutions like
the unique challenges 2008 fiscal year. other eurozone countries will be (RM107 billion) of one-month Citigroup.
policymakers Budget experts indescribably sadder. US Treasuries at zero yield. Even “People think outsourcing is a
worldwide are likely suggest the red ink Similarly, in an unusually more astonishing, demand was recession-proof industry. It is not,”
to face next year. Even in fiscal 2009 could gloomy report, the World Bank so great the US government could says Siddharth Pai, a partner in
countries previously approach US$1 trillion said the world economy was on have sold four times more than the Technology Partners International,
believed to be immune (RM3.57 trillion). This the brink of a rare global recession, actual offering. a consulting firm that publishes an
to the global economic US$1 trillion figure world trade will fall next year This abnormality highlights index of global outsourcing deals.
crisis have seen their doesn’t include the for the first time since 1982, the shell-shocked stance of Pai says the index is at a 10-year
MakingSens and capital flows to developing investors – willing to forego yield low.
prospects darken US$500 billion (RM1.8
considerably. by Tan Siok Choo trillion) to US$700 countries could plunge by 50%. in preference for absolute security That industrial powerhouses
In short, 2009 is billion (RM2.5 trillion) “We know that the financial of capital. as well as low-cost developing
shaping up to be a year when economic recovery package that crisis now is likely to be the worst More depressing for Malaysian countries have been caught
reality could exceed even the Congress is expected to pass early since the 1930s,” said Justin Lin, policymakers, the perception that in the global economic crisis
worst expectations. This suggests next year. the World Bank’s chief economist, countries like China and India are suggests every country is possibly
Malaysian policymakers should Two reasons have been a comment that summed up what immune to the global economic vulnerable. For Malaysian
be flexible, rather than dogmatic, advanced for the phenomenal lies ahead next year. crisis has been shattered. policymakers, complacency is a
about stepping up government expanding fiscal deficit – the Two odd news items underscore China’s exports shrank last word that should be deleted from
spending, even if this means a Treasury’s financial stabilisation the depth of investors’ fears. The month, the first decline in more their vocabulary.
markedly higher budget deficit. efforts and shrinking tax receipts. UK-based Independent newspaper than seven years. November’s
Last Wednesday, the US Since both trends are likely to noted the spreads on credit default 2.2% drop in exports from the year Opinions expressed in this article
Treasury Department said for the continue in 2009, it doesn’t take a swaps (CDS) suggest Britain ago figure underlines how rapidly are the personal views of the writer
first two months of the current Nobel prize winner to realise that is more likely to go bust than China’s economy has deteriorated, and should not be attributed to any
fiscal year that began on Oct 1 this by end-September 2009, the current companies like McDonald’s and news reports say. In October, organisation she is connected with.
year, the federal budget deficit puddle of red ink could be the fiscal Coca-Cola. China’s exports expanded by 19.2% She can be contacted at schoo@
totalled US$401.6 billion (RM1.4 equivalent of the Pacific Ocean. CDS measures the cost of from a year earlier.