Monday, November 05, 2012

Sandy May Slow Malaysian Economy In Short Term

KUALA LUMPUR: Hurricane Sandy will not have a major impact on the Malaysian economy as the calamity will only affect the global economy in the short run, said S Das & Associates Pty Ltd consultant Satyajit Das.

“I don't think it will have a major impact in the long run because in the short run it will have a reduction in growth obviously in this quarter and probably in the next quarter.

“The reconstruction part of it will be funded by reinsurance from outside the United States.

“What happens is that some things you can control and some things you don't control.

“You are going to be impacted by this but the degree to which you will be affected is unknown and you have been a beneficiary in a year or so of certain things like when Japan made a decision to turn off its nuclear plant, it is very good for your LNG exports,” he told reporters after delivering an afternoon talk titled “The End of Growth?” yesterday.

Hurricane Sandy's economic toll is expected to exceed US$20bil after the biggest Atlantic storm slammed into the Eastern US, damaging homes and offices and flooding subways in America's most densely populated city.

Sandy, spanning about 1450 km, slammed into southern New Jersey on Monday and brought a record storm surge of 4.2 m into Manhattan's Battery Park while flooding, high winds and fallen trees cut power to about eight million customers from South Carolina to Maine and travellers were stranded as US airlines grounded more than 16,000 flights.

US stock trading closed back-to-back earlier this week in the first back-to-back shutdown for weather since 1888. “You will be a beneficiary because your interest rate is high relative to developed markets. What we have seen is a lot of capital flows which is very helpful in funding your development and so forth,” he said.

“If the US, Europe, China and Japan which make up 70% to 80% of the world's (economy) and if their demand goes down, it is difficult not to see Malaysia not to get impacted. It is a question of degree. I think you can protect yourself a bit as you have some good industries like obviously the petroleum industry and agriculture,” he added.

Das is also an author and an international specialist in financial derivatives and capital market, with over 30 years' experience in the financial market.

The afternoon talk was organised by the Malaysian Investment Banking Association. - Bernama

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