Interest rate cuts by five of the
world's most influential central banks to cope with the worst
financial shakeout seen in 80 years have been carried out. Central
banks in England, China, Canada, Sweden and Switzerland, the European
Central Bank and the US Federal Reserve eased their key interest
rates. IMF's latest assessment is that a global recession or slowdown
in world output growth to 3.0 percent or less may come in 2009.
What is the impact on major Southeast
For Indonesia: The current financial
crisis is expected to hit the Indonesian currency and stock market.
In the view of the Indonesian government, a weakening rupiah is
manageable as long as it is orderly.
Dangers for the Indonesian economy may
also come from other countries. Analysts predict that, because of the
crisis in thus, China may shift its export destination from the U.S.
to countries like Indonesia." Consequently, some politicians,
acting Coordinating Minister for the Economy Sri Mulyani Indrawati,
are calling for stronger defences against imports of unessential
goods and instead promote domestic industries like rattan, wood, tea,
coffee, cacao and crude palm oil.
Overall, growth would slow to 5.8
percent, below the government's estimate of 6.2 percent, precipitated
by a decline in exports and imports, as well as in the financial,
services and telecommunications sectors.
For Malaysia: Malaysia’s politicians,
including Tan Sri Second Finance Minister Nor Mohamed Yakcop,
continue to insist that positive growth will continue from 2008 to
2009 and that the country is not heading for a recession although the
5.4 percent growth target for 2009 will have to be recalculated
because of the global financial turmoil.
But, even the optimistic Second
Minister admitted that countries worldwide were going to be affected
by the global financial turmoil in some way, depending on the length
and extent of the recession in the United States and Europe although
this was offset by the good news that inflation was no longer a major
concern for Malaysia due to the significant drop in the prices of
For the Philippines: The Philippine
domestic economy would grow by only 4.4 percent in 2008 and further
slow down to 3.8 percent in 2009 while the inflation rate was seen to
ease to an average of 7.0 percent in 2009 from 10.1 percent in 2008.
Annual inflation rate in September 2008 had been lowered to 11.9
percent from a 17-year peak of 12.5 percent in August 2008.
For Singapore: Singapore is preparing
for the worst. Retrenchments in Singapore may be on the cards if the
global economic crisis persists and Singaporeans must be prepared
that their wages will be affected. Analysts forecast that 2009 will
be worse than 2008 and the impact is still unknown.
Bernama, “Malaysia To Continue
Registering Growth, Says Nor Mohamed” dated 9 October 2008 in
Bernama website [downloaded on 12 Oct 2008], available at
Channelnewsasia, “Labour chief says
retrenchments likely if global downturn continues” dated 9 October
2008 in Channelnewsasia website [downloaded on 13 Oct 2008],
Dumlao, Doris, “BSP views greater
monetary flexibility” dated 9 October 2008 in Philippine Daily
Inquirer website [downloaded on 13 Oct 2008], available at
Suharmoko, Aditya, “Indonesia far
from crisis, say analysts” dated 9 Oct 2008 in the Jakarta Post
website [downloaded on 9 Oct 2008], available at