First of all, thank you very much for your persistent interest in the ECONOMIC FORUM. When Saudara Benjamin Koh first approached me to create this web-site, I think neither one of us had any inkling as to the number of visitors it would clock. (Though somehow I still personally suspect that figure of six million!)
Thank you all also for the many insightful comments that have been made.
I welcome any feedback from you all. The more the better in fact.
However, I MUST APOLOGISE BEFOREHAND SHOULD I BE UNABLE TO REPLY PROMPTLY
OR IN SOME CASES NOT AT ALL. As you may have guessed, undertaking
the task of writing for this web-site is being done only in my spare time,
which apparently (by virtue of some mysterious transpirations!) has consistently
beendepleting ever since the site was launched! In retrospect, I
also apologise for the delay in some of the articles. Saudara Benjamin
and I had initially
agreed that the fortnightly frequency was feasible upon the assumption that each article was of about 1750 words. However, as it turned out, a meaningful analysis cannot be undertaken within that word limit; and so very often, I am unable to meet expected datelines.
The most frequent request I get relates to forecasting issues: "How
long will this turmoil last?" "How much further will the currency
or stock market fall?" "Will Singapore be spared?" No doubt,
these are perhaps the areas in which Economics comes to the fore of being
of any use to humanity! However, I fear that it is also the area
with which I do not feel I am qualified
to make a pronouncement upon. This is so because in reality FORECASTING IS ONLY PART ECONOMICS. Good forecasting also necessitates a thorough understanding of the political situation of an economy, the prevailing attitudes of the
business community and its relationship with politicians and how this might effect changes in the near future, of that economy's recent history, its administrative structure and sociological make-up.
Of course, one could always employ a Vector Autoregressive (VAR) model
and produce forecasts for the coming year or two. However, VAR models
are not likely to be accurate for the Malaysian economy because there is
insufficient data to meet the requirements of Asymptotic Distribution Theory.
(The Theory assures us that over large samples, short-term forecasts will
be reasonably accurate.) To date, I have comparable observations
from only 1970 to 1995 on an annual frequency. (Inflation data for
example produced by Bank Negara cannot be relied upon for statistical analysis
insofar as the CPI is constantly being re-based and therefore is discontinuous.)
And by the time one takes into account non-stationarity, correct for the
serial-correlated errors, allow for structural breaks and introduce dynamics (i.e. lagged variables) into the regression equation, only twenty or so observations remain. Twenty years may seem like a long time, but Asymptotic Distribution Theory assures us that in all likelihood, it will not be representative; and so any forecasts made based thereupon will be highly suspect.
Nevertheless, I strongly recommend the Global Economic Forum web-site, belonging to Morgan Stanley, whose link you shall be able to find on the LINKS TO OTHER RELATED SITES page. To recommend, however, is not necessarily to agree nor endorse. Nevertheless, the thoughts and forecasts presented there should I hope at least be able to give a start to those needing them.
For 1998, Morgan Stanley is predicting a 2% growth, that the ringgit will continue to slide (in fact until mid-1999 or so) and an IMF bail-out by June. For the Singaporean economy, the dollar is expected to depreciate slightly; whereas some slowdown in output growth is expected. But overall she is forecast to emerge relatively unscathed.
Thank you all once again; and I do hope this "alternative" presentation
of Economics - 'alternative' in the sense that Malaysian economics appears
to be heavily-dominated by Keynesian theories - you shall enjoy reading
as much as I have writing them.
Your faithful columnist,
RASHDAN M RADZI