The businesswoman, presumably from a Western industrialised nation, claimed that she was about to lose everything because a client of hers had failed to pay her. Her struggles made her question about the recovery that had been widely reported to be taking place in the global economy.
The woman’s story is, perhaps, just one of many that reflect the scars left by the deep global recession that occurred between the second half of last year and early this year. And such struggles are still prevalent among some fractions of society, particularly in Western industrialised nations where the unemployment rates are high and rising and access to financing is limited, although recent official data and leading indicators suggest that their economies have been picking up.
Take the US economy. It may have emerged from a prolonged recession after the injection of the massive government stimulus packages into its system. But credit is still hard to come by for the bulk of its citizens and businesses, and its labour market conditions are still weak, with the unemployment rate reaching a 26-year high last month at 10.2%. Situations like these may take a bit longer time to heal. The woman’s debtor, for instance, may likely need more time to rebuild wealth and capacity to repay dues.
(The joblessness in the United States, according to some professionals, is expected to bottom out only in the first quarter of next year. Last month, the US government estimated the United States’ gross domestic product (GDP) for the third quarter of the year to have grown at an annualised 3.5%, but the revised number put the actual growth rate lower at 2.8%.)
The scenario is quite different in Malaysia, and most probably in many other Asian countries as well. The rebound of the region’s economy, led by China, is outpacing the rest of the world and it is seen to be gaining momentum.
The Asian Development Bank, for instance, forecasts developing Asia to grow about 3.9% this year and 6.4% next year. Unemployment rates also seem to have improved for most countries in the region, and there is easy access to liquidity, which although viewed negatively, is said to have contributed to the increased risk of new asset bubbles forming in the region.
Last week, the Department of Statistics announced that Malaysia’s GDP for the third quarter of the year contracted 1.2% year-on-year. Although still negative, the number was a vast improvement, compared with a contraction of 3.9% in the second quarter and 6.2% in the first quarter. It was also reported earlier that the labour market of the country had improved with the unemployment rate in the second quarter standing at 3.6%, compared with 4% in the preceding quarter. This was amid a growing labour force in the country during the second quarter.
According to Deputy Human Resources Minister Datuk Maznah Mazlan, the current jobless rate of less than 4% indicates that the nation has technically achieved full employment.
No doubt, such official data paint a rosier picture of the Malaysian economy compared with the earlier part of the year. But do they really mean anything to the man on the street?
StarBizWeek speaks to four individuals from different walks of life to find out.
For Bobby Raj, 43, who operates a small trading company dealing with electronic products in Ipoh, the worst is definitely over for him. Orders are slowly trickling in from local manufacturers.
“Small orders, but enough to get by for the moment, while we wait for better days ahead ... hopefully, they will come,” he says.
Raj had earlier thought he had to fold his business by the second quarter of the year because he had not been receiving any order from his clients at all for more than six months. But he decided to persevere for a while longer after reading about some green shoots emerging in the economy. He also changed his strategy by turning to local manufacturers after having served mainly the foreign markets for more than five years.
“With so much talk about China and India emerging as the next economic giants, maybe I will also try my luck there. The only problem for me, though, is perhaps the language barrier,” Raj jokes.
“So, maybe I will find some partners, but such plans are not so plausible for me at the moment,” he says
As for Raj’s friend, Steven Tan, also 43, who operates a popular restaurant in Ipoh, his business has also “improved a lot” over the past few months, compared with how it was in the first half of the year.
Although his “current flow of income is nowhere near what it used to be in the boom times of the mid-2000s”, he says he still feels contented. At least, there is more hope now, he says, as the number of patrons at his restaurant has been increasing gradually by the month.
“Confidence is back, and people are now more willing to spend on dining out,” Tan says.
The bullish sentiment of the local consumers and their willingness to spend are reflected in the consumer sentiment index (CSI) as measured by the Malaysian Institute of Economic Research. According to the local think-tank, the CSI has been in the positive territory since the second quarter of the year, with the index exceeding the benchmark 100 points to settle at 105.8 in that quarter and 105.4 in the third quarter.
Despite an improved market condition, Tan has ruled out any plan for expansion at this juncture.
It’s a different story for Robin Ng, 30, who operates an “organic meat” restaurant in SS2 Petaling Jaya. Opened just five months ago, the outlet is already enjoying “brisk business”, and this has prompted Ng and his partners to plan for another outlet in the Klang Valley before Chinese New Year.
“We are still doing market research on a couple of locations which we deem suitable,” Ng says, adding that his company’s vision is to dominate the local “organic meat” food and beverage market within the next two to three years.
As for Aznita Azmil, 31, who is attached to a private company in the Klang Valley as an analyst, her concern is mainly about the possibility of her employer using the sluggish economy as an excuse to reduce bonus payments or give poor salary increments.
On a personal level, she says her spending pattern has not changed much throughout the changing scenario of the local economy as she considers her income as quite stable.
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