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UPDATED VERSION. Monday, July 7, RAM Ratings Services Bhd revised its GDP forecast on Malaysia’s economic growth in 2008 from 5.9% to 5.0%.

Forecast went further south from two authoritative bodies today.

Malaysian Rating Corporation Bhd (MARC) today lowered its forecast headline GDP growth for the country to an average of 5.2% for the whole of 2008, down 0.7% from its initial forecast of 5.9%.

More acutely, also today, the Malaysian Institute of Economic Research (MIER) revised Malaysia GDP's growth for 2008 to scale down to 4.6%, slashing its original forecast of 5.4%

In contrast, the Abdullah Administration had projected the Malaysian economy during the Mid-term Review of 9MP (2008-2010) period to expand at an average of 6% per annum.

Also today, Bursa Malaysia Bhd announced that its second quarter net profit for the period ended June 30 fell 56% to RM28.64 million from RM65 million a year ago, due to a decrease in trading revenue where turnover fell 34% to RM85.67 million from RM130.36 million.

Double whammy: Growth slows, inflation up

Meanwhile, inflation is on the rise for Malaysia.

July 9, Bank Negara Governor Zeti Akhtar Aziz announced at a banking seminar that recent fuel price hikes may push inflation above 6% in June, nearly double May's rate and the highest in 26 years.

Inflation was around 2% last year.

Going by records, inflation reached a 22-month high of 3.8% in May. The last time inflation crossed 6% was in May 1982 when it touched 6.1%.

However, the official spin in Putrajaya has been saying that inflation may only cross 5% this year, besides promising not to further raise fuel prices this year.

Forbes reported that economists are mixed whether a sharper-than-expected rise in inflation will prompt Bank Negara to raise its key overnight policy rate -- used by banks to set lending rates - which has been unchanged at 3.5% since 2006.

'Misery Index' for Malaysia?

Can someone start compiling a misery index for Malaysia?

For those uninitiated, the misery index is an economic indicator arrived at by adding the unemployment rate to the inflation rate, a methodology initiated by economist Arthur Okun. Basically, it is assumed that a higher rate of unemployment coupled with a worsening of inflation, will create economic and social costs for a country.

Later, in the 1970s, Harvard economist Robert Barro introduced the Barro Misery Index that added GDP and bank lending rate into the computation.

What's more worrisome is that some economists believe the misery index is closely linked to crime rate. It has been illustrated that the Misery Index and the Crime Rate correlate strongly, and that the Misery Index seems to foreshadow the Crime Rate by a year or so.

Meanwhile, talking about crime, Malaysia and Malaysian Police score their own goal, night after night and without fail.