Malaysia Can Withstand Global Uncertainties Amid Strong Economic Fundamentals -- Economist

BANGI, April 7 (Bernama) -- Malaysia’s strong economic fundamentals have enabled the country to face and weather global uncertainties, including protracted conflicts in West Asia, said Ambank Group chief economist Firdaos Rosli.

He said that currently, the country's economy is not showing signs of recession, despite the ongoing geopolitical conflict putting pressure on the global economy.

“So far, we can conclude that there is no impending recession, and we do not see Malaysia experiencing a recession this year,” he said at the forum “West Asia Crisis: Economic Implications, What is Malaysia's Action?”, organised by MINDA-UKM here today.

Firdaos said that, as an open economy, Malaysia is indeed exposed to global economic developments, with a high level of trade openness exceeding 130 per cent of gross domestic product (GDP).

However, he said that the country’s economic performance is still supported by a growth cycle that has remained positive since the 2008 global financial crisis, despite facing fluctuations in the business cycle.

“Data from the Department of Statistics Malaysia shows that our overall growth cycle is good, although there are periods of slow growth cycles, and this does not mean the economy is in recession,” he said.

For the record, Bank Negara Malaysia (BNM) expects the Malaysian economy to grow between four per cent and five per cent this year, driven by resilient domestic demand and continued investment momentum.

This projection range is slightly broader and more optimistic than the 4.0 per cent to 4.5 per cent range projected by the Ministry of Finance in Budget 2026, announced in October last year.

Meanwhile, Firdaos said that after the COVID-19 pandemic, Malaysia's business cycle showed more frequent periods of contraction than of expansion, reflecting a more challenging recovery than before the crisis.

“This means that returning to the pre-crisis levels is more challenging, although the annual growth rate is still registering encouraging figures,” he said.

Commenting on global developments, Firdaos said the International Monetary Fund and the Organisation for Economic Co-operation and Development had cautioned about the risk of slower growth and rising price pressures due to higher energy prices.

As for oil prices, he said that a 10 per cent hike could reduce global output by between 0.1 percentage points and 0.2 percentage points, while the current energy supply disruptions are described as among the largest in history.

“We are currently seeing a cascading effect from physical shocks to macroeconomic shocks, including inflation, which is affecting food prices, transportation and the overall cost of living,” he said.

Meanwhile, he said Malaysia possesses a certain level of resilience, including its position as a net exporter of energy such as gas and electricity, and as a net importer of oil.

He said Malaysia is also currently facing challenges from a food security perspective, as more than 50 per cent of food is imported, which could contribute to price increases if the global supply chain is affected.

Firdaos also cautioned about three main elements that could affect the country’s economy in the near term, namely export shocks, inflationary pressures and financial market volatility.

“However, this depends on the duration of the conflict. If it lasts more than six months, the impact will be much different compared to a short-term scenario,” he said.

-- BERNAMA