Monitoring Business Cycle: Malaysia Experiences International Seminar on Early Warning and Business Cycle Indicators, Scheveningen, The Netherlands, 14-16 December 2009 Monitoring Business Cycle: Malaysia Experiences Department of Statistics Malaysia “Producer Of National Statistics” http://www.statistics.gov.my

A. Background 1980’s - University of Malaya was successfully developed the FEA Monthly Index. 1993 - Department of Statistics Malaysia started to work on the economic indicators - Completed the project with two set of Composite indexes : The Leading and Coincidence Index 1997: Sight revisions were made plus new set of lagging index 2000 - First made to public known as Malaysia Economics Indicators

A1. Real GDP vs Coincident Index

A2. The Chronology of Malaysia Business Cycles Reference Cycles Reference Dates Duration (Months) Peak Trough Contraction Expansion Full Cycles 1st Cycle July 74 Feb 75 Jan 85 7 119 126 2nd Cycle Jan 86 Dec 97 12 143 155 3rd Cycle Nov 98 Feb 01 11 27 38 4th Cycle Feb 02 Feb 08 72 84 5th Cycle Mar 09 13 Average 90 101 There were five business cycles recorded from 1970 to date. In general, the economic recession in Malaysia does not spent more than a year.

B. Sequential Signals of Recession & Recovery to Monitor Malaysia Business Cycles 5% was calculated based on the average growth of annual real GDP for Malaysia prior to 1996

B1. Signals for 1997/1998 Recession and Recovery

B2. Signals for 2001/2002 Recession and Recovery

B3. Signals for 2008/2009 Recession and Recovery

C. Measures to overcome the weaknesses of Malaysia Economic Indicators Review the existing components (all indexes) Adding new potential variables Revised the methodology Create the supplementary indexes Testing the performance of the system Made to public

Department of Statistics Malaysia website: Thank You Department of Statistics Malaysia website: http://www.statistics.gov.my