1
The global
economic
expansion
is
losing
momentum, as the financial crisis intensifies in the
advanced economies. The International Monetary
Fund (IMF) predicts the US economy will tip into a
mild recession in 2008 and economic activity in the
other advanced economies will be sluggish this
year, due to trade and financial spillovers. In line
with these conditions, the IMF has downgraded the
world economic growth projection for 2008 to 3.7
percent, from an earlier forecast of 4.1 percent.
Similarly, the IMF now anticipates a lower growth
of 3.8 percent for the world economy in 2009, from
4.4 percent forecast earlier. The risks to the global
growth are inclined to the downside, mainly
underpinned by the uncertainty associated with the
financial market crisis.
Domestically, the real sector outlook generally
remains weak. Latest data show subdued sectoral
performance, in line with forecasts anticipated for
the year. Cumulative to March this year, Net Value
Added Tax and Pay As You Earn collections,
respective partial indicators of consumption activity
and individual incomes, recorded marginal growth
compared
to
the
same period
last
year.
Consumption and
investment
lending slowed
considerably to 2.5 percent and 2.3 percent in
March, from 9.5 percent and 31.2 percent,
respectively,
in
the same period
last year.
Moreover, the latest Business Expectations Survey
indicates a relatively weak outlook for general
business conditions over the next 12 months,
although sentiments have improved a little from the
June 2007 Survey. However, on a positive note,
visitor arrivals showed an increase of 19.3 percent
in the first three months of the year, when compared
with the same period last year.
The economic recovery expected for this year is
now projected to be lower at 1.7 percent, compared
with a 2.2 percent growth anticipated earlier.
Looking ahead, economic growth for 2009 and
2010 has been revised downwards to 1.1 percent
and 1.6 percent, respectively.