Monday, November 24, 2008

Recession : Is it Coming?

A strange phenomenon happened yesterday in KL. What's so strange, you ask? Well, consider these factors:

1. It was a Sunday

2. It is a school holiday

3. KL streets weren't as crowded as usual

4. Dwindling numbers of shoppers at our year-long Sogo Sale

I can offer two explanations for this unusual phenomenon :

1. Its school holiday, so lots of people are going on holiday (somewhere other than KL, that is)

2. Consumer spending has been dampened by the imminent onslaught of a recession

The first explanation is unlikely. Why? We hear about recession almost daily on the news, with words like 'credit crunch' becoming part of our 'kopitiam' conversations. People fear about the gloomy economy. They fear that recession in other parts of the world will affect them, make them lose their jobs. Therefore, consumers tend to spend less on luxury items such as travel, although a case study of 'the Sogo effect' yesterday shows that, at first glance, people also cut spending on clothing.

So, is recession really hitting Malaysian shores? Or is it the expectation of a recession that is actually dampening the economy? (If deflation is happening, i dont see it..a plate of nasi beriyani at Insaf restaurant (the best nasi beriyani ever) costs a hefty RM sbb sedap makan jgk)

According to a friend of my dad's who works in the financial sector, recession may not hit us just yet, probably next year. Still, we malaysians know from our 1997 experience that it doesn't hurt to prepare an umbrella before it rains. In the US, it has already been forecasted that unemployment would reach 8%, a troubling number for a troubled economy, as a result of retrenchment. Less workers, less output. Less output, less, trade. less trade, less income=less consumer spending. Overall, its pretty bad. (tula..sapa suruh riba byk sgt kn2??)

How will it affect us students? Well, the pound sterling, for one, has depreciated (RM 5++ for each pound), so our government and corporate sponsors could better afford to send students to the UK.


If a recession is coming, it poses a question as to whether they have the means to support students, wth less money coming in from trade and spending(hopefully they continue to sponsor in spite of the gloom..amin:))..(and please dont reduce my monthly allowance..hihi)

Whatever's happening, dont forget your responsibilities. Study well. Insyaallah, we'll get there. :)