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Seven Charts Show State of Malaysia’s Economy Ahead of Polls

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(Bloomberg) — As Malaysians head to the polls on Nov. 19, rising costs of living and a weaker currency will likely influence how they cast their ballots.

Latest indicators show mixed results. Gross domestic product logged a region-beating double-digit growth in the third quarter and labor force has shown flashes of returning to pre-Covid levels, even as key sectors including palm oil and manufacturing continue to face worker shortages.

Here’s where the economy stands prior to the national vote.

Malaysia expanded at 14.2% in the July-September period, a blowout number even with a low base in a Covid-addled 2021. Sustained strong demand for services and manufactured goods is likely to keep the economy clear of a recession next year, a view echoed by Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus.

Still, the rapid, but uneven rebound from the pandemic may have bypassed some key electorate bases, as seen in the labor data.

Malaysia’s overall jobless rate returned to a near pre-pandemic level of 3.7% in September, with levels varying with ethnicity.

Malays, the largest ethnic group, trailed other blocs with an unemployment rate of 4.1%. In comparison, Indians had an unemployment rate of 2.8%, while ethnic Chinese posted the lowest jobless rate of all groups at 2.7%.

Peninsular Malaysia, home to the capital city of Kuala Lumpur and Penang, may be the pageant winner for economic performance, but the eastern states of Sabah and Sarawak that jointly account for a quarter of parliament seats hold the swing blocs key to forming the next government.

Sabah saw its jobless rate fall to 8.2% in the third quarter, but remains well behind its pre-Covid peak of 5.3%. Meanwhile, Sarawak had improved to a 3% jobless rate. Female unemployment reached its lowest in 10 quarters at the end of September at 3.9%, while that for male workers was at 3.6%. The rate of youth out of jobs was high at 10.8% in the 15 to 24 age group.

Like elsewhere, Malaysia’s 32.8 million people are struggling with rising costs of living as inflation has doubled from the start of the year despite food and fuel subsidies. Core inflation, which excludes volatile items like fresh foods, touched a seven-year high of 4% in September.

The cost for food reached a decade-high of 7.2% in August, with meat and dairy prices burning a hole in the pockets of consumers. Though Governor Shamsiah said that the overall inflation had likely peaked at 4.5% in the third quarter, voters expect the next government to retain price controls.

A weak ringgit has bloated Malaysia’s food-import bill, worsening price pressures in a nation that relies on overseas purchases to meet more than half its food needs. The dollar strengthened against the nation’s currency in 2022, rising to 4.5925 from 4.1615 in the latest year-over-year reading. On the flip side, a weak ringgit, rising commodity prices and surging manufacturing sector boosted exports to a record 146 billion in June.

While imports have grown at a higher rate than exports through September in 2022, there’s little reason for alarm given the trade balance is in surplus.

Keeping in step with other central banks fighting inflation, Bank Negara Malaysia hiked borrowing costs for four straight sessions this year. Bloomberg Economics expects another rate increase at BNM’s next meeting in January amid the continued increase in core inflation.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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September merchandise trade deficit narrows to $1.3 billion: Statistics Canada

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OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.

The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.

Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.

Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.

Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.

In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.

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