Unemployment in the US could hit 8.5% by mid 2009. Sales season has started a month earlier since early November but the numbers are not very encouraging. Sales of new houses dipped 2.9% in November compared to the same period last year.
Japan's production of cars, trucks and buses marked its steepest drop in at least four decades in November, an industry group said Thursday, as the fallout from the U.S. slowdown crimped auto demand.
Vehicle production in Japan, home to Toyota Motor Corp. and other major automakers, plunged 20.4 percent in November compared to the same month a year ago to 854,171 vehicles, the Japan Automobile Manufacturers Association said.
Sales of new autos are expected to stand at 4.86 million in 2009, down 4.9 percent from what it's projecting for this year at 5.11 million, the group said.
New vehicle sales in Japan have never dipped below the 5 million mark since 1980.
The tourism industry should brace for the worse too. The industry is expected to contract by 18% next year.
In Malaysia, consumer sentiment is following similar patterns. Economic and employment data will be telling in the next three months. A few legal officers I have spoken to indicated a rising number of enquiries from employers on retrenchment.
Even if job loses are kept to minimum, many factories are cutting production and have requested their workers to take unpaid leave. This will definitely affect income and consumption.
I would like to urge the government to consider a few pertinent steps:
- Keep EPF contribution at 11%. The reduction of EPF saving by 3% does not help to motivate consumers to spend. Instead, the government should reduce income tax by 3% and increase the level of taxable income to RM5k per month.
- Allocate additional funds to state governments to face imminent economic downturn in their respective states. The federal government should give back at least 10% of total direct taxes collected from each state.
- Prices of many consumer items have not come down despite further drops in retail oil prices. The government should publish a schedule of projected oil prices and provide a guarantee on these prices. This will provide certainty to businesses to consider price reductions.
- This is the time to put more attention on domestic sector and SMEs. We cannot continue to depend on FDIs to grow our economy. Hence, this is the time to do the right thing including liberalising the FIC guidelines, the ICA and the NEP.