Gunabalan ruminates.....

AS the saying goes, everyone learns lesson's day after and not before?

I suppose that's why historical lessons are important guidelines to future prosperity or lack off.

There are observable signs of an economic collapse starting to emerge, as Germany recently slipped into a recession. 

As the largest economy in Europe, the nation entered this downturn partly due to the impact of high gas prices from the previous year, which began to affect consumer spending. 

This and more happenings may even make Germany join BRICS monetary union and thus exacerbate the coming fall of US dollar dominion....which in itself means more chaos and war globally......which makes for supply chain breakdowns for goods and commerce to increase due to sanctions and tight US dollar access globally.

Which means less profit for shareholders and businesses......which will force MNCs and GLCs to cut down on staffing to increase short term quarterly profits....which reduces demand and consumption nationally and worldwide ....which induces stagflation and later a reccesion.

Even in Malaysia and locally in Asia, the man on the street will start to feel the collapse by Dec '23 even with monetary shoring and fuel subsidies by highly geared debt ratioed governments.

It would seem that we will welcome '24 New Year and more with less fanfare and higher interest rates worldwide

I feel that although headline inflation had exhibited a downward trajectory in recent months, primarily driven by the tempering of various cost factors, core inflation – which excludes food and energy prices – is poised to persist at elevated levels due to the robust state of demand condition.

But because this is malaysia, continued implementation of price controls and fuel subsidies will serve as partial mitigating factors, curbing the extent of inflationary pressures..... though generally people will still feel the screw tighten harder by year end.

Fundamentally, a lot depends on western countries geo politics at this level. 

The games they play will decide how countries react and that sense of not knowing will mean business & trade will be on what is necessary only with very few business owners daring to keep stock... meaning manufacturing will suffer......meaning more job losses in that sector especially amongst MNCs .

That also means prices on 2nd hand assets ie real estate and private lixury homes will skyrocket in valuation and pricing ( if banks are allowed to borrow) as will Rolex watches, yachts, paintings and anything insurable .... like personal jewellery.

Watch how Bank Negara stabilizes money growth through SRR ordinances and you will know whether in Malaysia debt money growth will be allowed in short term or curtailed. M3 growth is almost guaranteed but it has to be followed by increased productivity and retail demand to make the gtowth positive and thus help raise ringgit valuation.

So, in short, pockets of our economy will prosper next 3 quarters but many others will stagger ....but not fail. 

THE BEST WAY TO EXPERIENCE ALL OF THE POSITIVES OF BUSINESS IS TO ACTUALLY LESSEN GOVERNMENT INVOLVEMENTNIN BUSINESS TGROUGH GLC's and help reduce govt red tape and in running a business. (At least for a short term until world consumers go back to normal)

In between now and then though, Workers in general will see limited salary increases & VSS will be normal in those industries that are dependent on supply chain for profit. .....the world in general will encounter troubling times until late 2026..... 

unless US goes to war with China... then all logic goes out window.

Even here in Melaka, current effects of stagflation can be seen evident in normal day to day life.....food & retail here locally mom and pop restaurants and cafes not doing well but those charging 60 ringgit and above per pax  for food and drinks are doing roaring business every single night of the week.... so much so, some business owners even opening new outlets with more varied menus that their old money and upper income clientele savors well!

In fact within next 12 months, I foresee any international fare ( food offerings and service ) to do very, very well...... especially when coupled with rise in S'pore dollar value.

Historically, I can best sum the coming days as a repeat of those trying times between 1970s and 1990s for our dads and moms working class generation. Those in their 50s and 60s now would be doing their kids a favor by rehashing what they remember of those olden days to their kids today to prepare them for what's coming in terms of financials and life in general.