[ipagelist tag=malaysia-macro-2010 num=7]
Though attracting much attention lately, the capital outflows story is not new. Except for 2004, the financial account has been persistently in deficit over the past decade, though the magnitude of net outflows increased sharply in 2008. Net capital outflows in 2008-1H09 partly attributed to portfolio outflows, which have since reversed to inflows. Persistent net FDI outflows since 2006, reflect not just lackluster foreign investments but also large increase in outward FDI by residents. Large outflows in “Other Investments” category of the BoP is also of interest, though the lack of granularity in the data leaves more questions than answers.
The debate on whether to label persistent capital outflows as “capital flight” may be more a matter of degree and semantics. While we think the issue deserves a more detailed and nuanced examination, this is difficult in the absence of more detailed published data, especially in the Other Investments.
Download Citi Research’s Malaysia Macro Weekly (18 Jan 2010)
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