Malaysian consumers thinks that the country is in “recession”,
becoming frugal and cautious, while other country grow confident about their
economies.

Recession = A downturn in the business cycle during which real GDP declines, and the unemployment rate rises.

Evidently shown that the main cause is due to the change in business and consumer confidence of the nation

Consumer confidence in Malaysia remained below optimistic mark,
changing their spending habits to save more since last year.

From chapter 5, we learned that expectations will affect the consumption function graph, when people are more optimistic they tend to spend more, while in this case people are more pessimistic causing them to spend less make the consumption function graph to shift down, making the real consumption to decrease.

Only 46 percent of Malaysians felt confident about their job prospects and that only 48 percent
were confident about their personal finances.

This actually shows the consumer confidence also follows the outlook of how the people view the country’s economy, “71 percent felt their country is in a recession”, showing how expectations actually causes the fall in aggregate expenditure causing more people to save money and spend lesser for usual consumption. Linking back to our topic 5.

This could be a big issue is because this would affect the GDP of the country to decrease as the expenditure of household will decrease, since GDP = Consumption + Investment + Government Spending + Net Exports, if the consumption part decreases due to the change in consumer confidence in people, the GDP of the nation will drop too. Since consumption means household purchases of final goods and services, with the household purchasing lesser items, spending will decrease. If the spending decreases firms will receive lesser revenues from the product markets, causing the factor market to be receiving less wages, rent, interest and profits. This will continue and be a vicious cycle, and in the end due to the drop in demand, there will be a drop in sales, and the demand for input will decrease, ultimately causing cyclical unemployment.

Thus we feel that this situation shouldn’t be taken lightly, the government should be doing something to motivate the people to spend more money. Be it through a campaign showing the nation that country is actually not suffering from recession, or any other way to get people to spend more, it would not only benefit the country but benefit the people in the long run as well. We feel that maybe why the country feel that they are undergoing a recession is because of how the government behave thus we feel that the government plays a critical role in solving Malaysia economic downturn they are facing.

The concern here lies in the fact that new graduates make up more than a quarter of the unemployed, with 161,000 out of the 400,000 unemployed individuals in the country being the mentioned graduates. 

This unemployment is frictional, meaning that they are in between jobs, changing jobs, or in this case, looking for their first job after graduating. 

This occurs because it takes time for these graduates to find a job that is suitable for them after graduation. Since this unemployment is mostly only temporary, I believe that this issue is not a pressing one.

The issue is also easily solved:

As mentioned in the article, the Malaysian government is encouraging the involvement of private companies as they will open up many more employment opportunities as well as provide industrial training. 

This ensures that they have stable jobs that will be able to support economic growth in a more inclusive way. 

Other than that, the Malaysian government already has in place Jobs Malaysia, which is an online platform for people to look for jobs.

This makes it even easier for graduates to find a job that is right for them as it is easy to navigate as well as effective in matching graduates to jobs that will be suitable for them.

Besides that, there is also the 1Malaysia Training Centre – an initiative by National Blue Ocean Strategy (NBOS). 

Graduates are able to use and optimise the facilities available for them in the centre. Not only that, this project also provides the ease of finding and appealing into courses that are offered by the Public Training Institute which can be found in many places around Malaysia. 

Through these available platforms that are easily accessible, I think that the government has done a good job in ensuring that their people are able to find jobs quickly upon graduation, hence decreasing the time in which they remain unemployed. This is proven to be true as it is reported that there has been an overall improvement in Malaysia’s economy with the unemployment rate recording a decline this year as well as the projected growth in the gross domestic product of between 4.5% and 5.5%.

Article 2: http://www.themalaysianinsider.com/malaysia/article/graduates-among-400000-currently-unemployed-in-malaysia-says-minister

Article 3: http://m.todayonline.com/world/asia/malaysia-prime-minister-najib-razak-aims-shore-support-new-growth-plan

Macroeconomics.

Presenting the plan to parliament, Mr Najibforecast gross national income per capita (GNI) would rise 7.9 per cent perannum – enough to hit the goal set two decades ago of joining the ranks ofhigh-income nations by 2020.

This statement shows that Mr Najib had already set a certain goal for the country to increase its gross national income per capita (GNI) so that Malaysia will be able to join the ranks of high-income nations by 2020. He is a forward-looking leader as he is always planning and trying to improve Malaysia’s economy in the future.

Mr Najib’s “people-anchored growth” plan alsoincluded a slew of feel-good measures aimed to ease the burden of rising costsof living and poor infrastructure in his government’s electoral heartland inrural parts of the Borneo region.

In chapter 2, it says that since gross national income per capita (GNI) measures the standard of living of people, measures that Mr Najib carried out are necessary so that they are able to meet their goal.

Actions that were carried out:

Inflation – A sustained and continuous increase in the general level of prices of goods and services in the economy. When inflation is present, a dollar today can buy less than a dollar could in the past.

An example is, taken from http://business.asiaone.com/news/falling-ringgit-bigger-bills-tighter-belts-malaysians , for many, like Mr Ammar Ghazali, the ringgit's fortunes have mirrored their own. He had just found a new job and set his ght sights on an iPhone 6 when it was released in Malaysia last November. He missed out on the first wave because of the huge demand. And when it was possible to get his hands on it, he realised that it had become too expensive in Malaysian currency terms. Since March, Apple has raised the price of the device twice - by 13 per cent in all - and it now costs RM3,550 (S$1,307).

This shows how much the value of pricing are increasing extremely for even locals to even buy what they want, this linking back to inflation showing the increase in price of the simple iphone 6 which becomes too expensive to be afford by Mr Ammar. Highlighting not only the effects of inflation but how negative inflation is to a nation and its people. This people not only have to spend more money to buy the similar number of items but also their income doesn’t increase during a inflation causing the standard of living to be way harder than the past.

Another example take from the same website is, Mr Peter Tan, 45, a Malaysian whose only child goes to school in Singapore, said that the recent payment of school fees was "painful". The manager at a building maintenance firm in Malaysia said that he pays $4,000 per semester for his 19-year-old son at Singapore Polytechnic. Currency movements have increased his fees this semester over the last by RM800.

Since right now the value of ringgit has fallen to rock bottom, changing it to Singapore currency would be very heart aching for Malaysian. Since the exchange rate would be tremendously high, as of right 9 July 2015, 1 Malaysian Ringgit can buy 0.36 Singapore Dollar, it just highlights how tough is it for Malaysian to buy the sufficient necessities and even pay off for the other relevant bills, like school fees or taxes. Even from the example it just shows how much Malaysian are suffering from the fall of value of the Ringgit dollar. Highlighting how Malaysia economy is going through a crisis and that the government needs to do something immediately as this might not affect the people life but also affect the economy even more as more and more people will start to become unemployed due to the fall in demand of items, as more people will not have sufficient cash to buy, causing a drop in labour demand, causing some jobs to become unneeded, which is what we called Cyclical Unemployment.

Thus we feel that the government should do something immediately to help solve this problem, either they can start to promote their country to tourists, so that more tourists will visit the country to improve the economy when they spend money in the country, or if not they could create fiscal policy or reduce taxes, this way they would allow the people to be able to spend more money which help in the nation economy recover in one way or another. No matter what method the government picks up we feel that something should be done as soon as possible, as this situation would only get worse, if this carries on.