Sunday, 26 June 2011

Analysis: U.S. economy influences the performance of GDP

in recent years, external economic indicators have started to show a less favorable outlook.
Is the latest statistics from the United States (U.S.), which shows total employment in the plantation sector is not created, the user quite quickly which is 54.000 in May compared with 232,000 recorded during the previous month.
in adition the us unemployment rate also showed an increase of 0.1% to 9.1% in may.
.this fear is based on the fact that the U.S. is one of Malaysia's largest trading partner. In addition, the relationship between the U.S. and Malaysia for the growth of Gross Domestic Product ( GDP) remains high at 86.9 percent. It means that the performance of the GDP of both countries have a strong positive relationship. If, in the U.S. economy experienced a decline, likely our economy will move towards the same, and vice versa. This argument is supported on export growth electrical and electronic (E & E), which became the largest export countries contracted four per cent in April compared to the same month the previous year due to declining exports to the U.S.. Thus, it is very important for our country to ensure the internal or domestic economy will continue to generate economic activity as a stronghold resistance to the overall economic performance. However, there are some shortcomings that need to be solved in order to achieve the aspiration. For example, statistics on Construction Industry Development Board (CIDB) shows the number of priority projects in the first quarter of 2011 was 589, or a decrease of 64.5 per cent over the period the same period last year. Based on the breakdown by categories, sectors such as infrastructure, residential and non-residential contracted 70.5 percent, 66.5 percent and 63.1 percent from a year earlier. In addition, many government development expenditure related to infrastructure development is also decreasing 12 percent in the first quarter of 2011. As a result, output growth for the construction sector experienced a decline of 3.8 percent in the first quarter of 2011 compared to 5.6 per cent recorded during the fourth quarter of 2010. In addition, the delay in implementation of construction projects can also impact on the economy. academic studies have shown some delay in the implementation of the project and others, who do not carefully plan by the contractor, the construction of weak management, lack of experience, lack the financial resources, the problem of sub-contractors, shortage of raw materials and labor. In an effort to rationalize government subsidies , domestic demand, particularly private sector expenditure is also experiencing a period of adjustment thus increasing the risk of a slowdown in private spending. Should the issue be given attention by all parties to ensure the construction sector growth is not retarded and could be a catalyst for sustainability of the country. This is due to the network with other sectors such as manufacturing, financial and professional services. Through the multiplier effect, economic growth, particularly the domestic sector will be more robust if the smooth running of the contract can be increased to a level more efficient. - The writer is Economic Analyst at Malaysian Rating Corporation Bhd ( MARC)

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