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Malaysia to see above 5% progress, say economists

PETALING JAYA: Economists have warned that the worldwide financial outlook for this yr can be fairly unstable because of the ongoing Russia-Ukraine conflict and the resurgence of Covid-19 in China.

Nevertheless, they predict Malaysia would nonetheless report financial progress nonetheless.

Universiti Utara Malaysia professor of economics Dr Okay. Kuperan Viswanathan mentioned Malaysia managed about 7% financial progress final yr, whereas predicting that the financial progress for this yr can be properly above 5%.

“The worldwide outlook is quite unstable for this yr, with the Russian-Ukraine conflict not seeing any finish and the Covid-19 resurgence in China creating nervousness for the remainder of the world.

“Since Malaysia has a extra numerous financial system that’s not depending on anybody main sector, we stand a significantly better probability of popping out fairly properly this yr.

“The present political stability in Malaysia can even assist to draw international direct investments this yr,” he instructed the Solar.

Universiti Malaya professor of economics Datuk Dr Rajah Rasiah mentioned disruptions have undermined provides of oil and gasoline and meals all around the world.

“Whereas exports of electronics items have expanded in the course of the pandemic as corporations started relocating manufacturing out of China to maintain exports to the US, particularly since 2020, the crunch attributable to disrupted provide chains has undermined provides.

“Critical shortages of oil and gasoline and cooking oil resembling rapeseed and sunflower seed oils, wheat and fertilizers have triggered a pointy rise in inflation in Europe and a lot of the world.

“Malaysia confronted a decrease influence solely as a result of we’re a web oil and gasoline exporter. Nevertheless, meals inflation has risen virtually twice as quick as the patron value index since April final yr.”

Rajah mentioned the rising US greenback, attributable to will increase in US Federal charges to comprise inflation in that nation, has induced a fall in alternate charges in most different currencies, with the influence of elevating meals import costs.

“Meals exporting nations, together with China, have imposed export controls to deal with meals safety.

“Malaysia is among the nations that’s dealing with such an issue.

“Sadly, we deserted assist for small-scale farmers within the Eighties and liberalized alternate charges in 1989-97. This mixed to trigger a power meals commerce deficit since 1989, which has remained detrimental till at the moment.”

Rajah added {that a} two-pronged coverage is essential for Malaysia to outlive the worldwide financial downturn this yr.

“Given the detrimental progress forecast for the world, together with the potential for stagflation occurring, the primary technique ought to deal with decreasing dependency on meals imports by remodeling the nation’s meals safety coverage.

“The emphasis should be on intensive, small-scale farming utilizing digitization and digitization, however by way of collective and cooperative use of applied sciences.

“The federal government ought to introduce Federal Agricultural Advertising and marketing Authority-type lock-ins to make sure secure costs for inputs and outputs.”

“There must also be sturdy connectivity and coordination between farmers and moist markets. It’s pertinent that the self-sufficiency charges in meals manufacturing be raised to between 80% and 90% within the subsequent three years.

“Presently, Malaysia imports 70% of the chillies consumed within the nation. It’s far worse for beef, lamb, ginger, onions, potatoes, garlic and pulses that are primarily imported,” he instructed the Solar.

Rajah mentioned Malaysia must also deal with capping the in a single day coverage charges (OPR) and introducing a portfolio for banks to lend to small-scale farmers at decrease rates of interest.

This needs to be assured by the Credit score Assure Company.

“Given the huge meals commerce deficit Malaysia faces, giant numbers of first-time farmers needs to be anticipated to use for loans.”

He mentioned Malaysia ought to make the most of the geopolitical developments in Asia, particularly the US-China political and financial tensions, to stimulate technological upgrading from low to excessive worth and launch extra actions within the electronics business.

“Such a system within the nation requires a critical overview in order that science parks, incubators, universities and authorities assist businesses improve to stimulate catch-up within the business,” he mentioned.

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