Factory outlet store macroeconomic report

Topics: Economic growth, Gross domestic product, Macroeconomics Pages: 11 (1856 words) Published: September 22, 2013
INTRODUCTION
Our organization, Factory Outlet Store (FOS), is a retail store that sells discounted clothing for adults and kids, from brand names such as Old Navy and Abercrombie & Fitch. FOS is a well-established brand and has a popular chain of stores in Malaysia, but we are looking to expand to Thailand with a first-ever four-storey FOS shopping center instead of freestanding boutiques.

We are interested in expanding to Thailand as it has a dynamic retail sector. Some of its major retailers include Tesco, Carrefour and other supermarkets/hypermarkets, leaving the clothing/fashion market quite open. Thus we feel that there is great potential for us to bring FOS into Thailand and establish our brand name there.

Question 1
Malaysia’s Economic Progress for the last 5 years
Year
(X axis)
GDP – Real Growth Rate %
(Y axis)
2004
6.8
2005
5.0
2006
5.9
2007
6.0
2008
5.7
The graph above shows the GDP Growth Rate for the past 5 years. Malaysia is one of the most open economies in the world, with exports and imports accounting for close to 200% of the country’s GDP. Over the past two decades, the country has successfully transferred from a commodity-driven economy to a more broad-based economy. GDP stands for Gross Domestic Product by adding Consumption, Investment, Government, Export and Import.

Some of Malaysia’s economic indicators include GFI (gross fixed investment), private consumption, government consumption, and import and export of goods and services. Malaysia’s imports and exports have decreased steadily, from 19.6% and 16.1% respectively in 2004 to 2.9% and 2.0% in the year 2008.

Year 2004

In 2004, a significant economic growth with a robust expansion in consumption spending and business investment, aided by brisk global demand for their exports reason being of the SARS period that impact the economy in 2003. After the SARS period, the economy accelerated to its fastest pace, with a 6.8 percent GDP growth.

Year 2005

A slowing global economy in 2005 implies an easing of growth for Malaysia as the economy due to increasing inflation and interest explaining the GDP growth from 6.8% to 5.0%. However, by the second half of 2005 the economy recovered momentum. With slower growth in external demand and cuts in government spending, the economy relied heavily on private domestic demand for growth. Expansion in the private sector remained favorable, as public investment shrunk for the second year running.

Year 2006

In 2006, there was a surprisingly strong GDP growth from 5.0% to 5.9%. Domestic demand increased as household spending, which remains an important source of growth, increased. There was strong growth in manufacturing output for electronics as the rising demand for digital music players and mobile phones with video playing capability and Internet access lifted electronics exports. Inflation was higher at 3.6% in 2006 from 3% a year earlier due to higher oil prices. Lower international oil and commodity prices, “moderate” wage pressures, and currency appreciation helped contain inflationary pressures. Year 2007

Malaysia’s economy continued to report positive growth of 6% in 2007. Private consumption, Government consumption and gross fixed investment have increased more than in 2006. The services sector expanded strongly and GDP growth was led by finance, insurance, real estate, and business services. Wholesale and retail trade, as well as accommodation and restaurants, also registered healthy growth owing to strong household spending and inward tourism programs to commemorate the 50th anniversary of independence. Tourist arrivals rose by 19.5% to 21 million in 2007, with significant increases in visitor numbers from People’s Republic of China, India, and Indonesia. Year 2008

From 2007 to 2008, there was a decrease in GDP growth from 6% to 5.7% because of the worse-than-expected US economy. Due to the fallout from the sub-prime turmoil, Malaysia’s exports were negatively...
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