By Tengku Noor Shamsiah Tengku Abdullah
KUALA LUMPUR, July 11 – Malaysia is a forward-looking and progressive state and despite all the challenges following the Covid-19 pandemic, its government has taken great efforts to maintain the country’s macroeconomic stability, says a leading global economist, Shan Saeed.
Countries go through up and down in the economic cycles, said Shan, who is chief economist at Juwai IQI, Malaysia, a brokerage house with offices in 15 countries with over 12,000 real estate agents.
“Nothing is a straight line. Malaysia will come back strongly as labour force has the ability to improve the productivity landscape once its population are fully vaccinated,” he said in a recent phone interview.
Shan was asked to share his views on a recent foreign media report stating that Malaysia is staggering down the road to a failed statehood.
In the last 17 months, he noted the government has effectively used fiscal policy to buttress the economy and lift the masses through stimulus packages.
He said the government has still room to manoeuvre in the fiscal space i.e under 7 per cent and debt to GDP ratio is at 67 per cent.
“This provides room to make strategic moves in terms of expansionary fiscal side. The positive side of the balance sheet at the moment is the higher oil prices which would boost the overall fiscal side and make a macro impact,” he said.
Shan said commodities prices going higher in the next six to 12 months can give ample space for the government to support the businesses and domestic demand.
At the moment, he said, it’s all about dual circulation strategy that Malaysian government is pursuing i.e
1. Supporting businesses
2. Encouraging domestic consumption
According to Shan, the Ringgit has maintained structural stability against US Dollar and credit goes to Bank Negara Malaysia by providing solid forward guidance to the financial markets despite all the economic fragility in the exogenous environment. Ringgit will be traded between 3.67 and 4.10 for 2021.
“In my view, with strong trade numbers till June 2021 and higher export figures about 50 percent can support the economy to bounce back. Malaysian economy has the resilience to come out strongly to have an appreciable growth trajectory of over 4.5 percent in 20202.
“We at Juwai IQI stand buoyant on Malaysian growth outlook for 2021-22 and its economy to perform better as more and more people are getting vaccinated and coming back to the work force,” he added.
On another development, when asked on certain quarters questioning the government why it is allowing people to withdraw money from their Employees Provident Fund (EPF), which is supposed to be savings for their post working days, Shan said: “It’s people’s prerogative to keep or to withdraw funds. It’s at the discretion of people to utilise their money as they please.
“Right now, people have a choice. By allowing the funds, government wants people to buy basic stuff in order to meet their daily requirement which is normal is any society or country.”
This is happening in many western countries too, he added.