Malaysia needs a stable political ecosystem to face the coming economic challenges, economic analysts said. – NSTP/FATHIL ASRI
KUALA LUMPUR: Malaysia needs a stable political ecosystem to face the coming economic challenges, economic analysts said.
Future Labour Market Studies (EU-ERA) chief economist Associate Professor Dr Mohd Yusof Saari said political stability was crucial in facilitating an efficient economic governance.
“In a few months, we will enter the year 2023 and this means that we are close to facing the global economic crisis phase, therefore, political stability is needed to face the situation.
“The decision to dissolve Parliament to obtain political stability is the right step taken to ensure Malaysia’s readiness to face the economic crisis next year,” he said in his article, “Keperluan Kestabilan Kerajaan Mendepani Krisis Ekonomi 2023-2024” (Need for Government Stability to Face the 2023-2024 Economic Crisis).
He said the country needs efficient economic governance to ensure economic recovery.
“The world economic growth in 2022 was projected to shrink to 2.9 per cent compared to 5.7 per cent in 2021.
“In 2023 to 2024, the world economy is expected to grow at a rate of 3 per cent per year, which is a situation that is not much different compared to 2022,” he said.
He said current global economic pace had also slowed down Malaysia’s growth and pulled down the overall recovery process, including the “recovery” of the cost of living.
Political instability since the beginning of 2020, together with the onset of the Covid-19 pandemic, he said, had caused a sharp contraction in Malaysia’s GDP of 5.5 per cent, a situation that had never happened since the country achieved its independence.
This, he said, was due to inefficient economic governance during the pandemic period, such as the long closure of business activities.
Meanwhile, EU-ERA economist Prof Muzafar Shah Habibullah said political stability was very important if Malaysians want to enjoy a comfortable life and a good standard of living.
“Studies prove that political stability can boost a country’s economic growth, whereby a 1 percent increase in political stability will increase economic growth by 0.25 per cent and a 1 percent increase in government effectiveness will increase the country’s economic growth by 0.61 percent,” he said.
He said a capable, dedicated and experienced government was needed to drive the national economy to achieve the projected GDP growth of 5.0 per year, unemployment rate of 4.0 percent and increase in average wage and salary of workers as stated under the 12th Malaysia Plan.
Prof Muzafar said an efficient, experienced and stable government with effective policies would help maintain inflation at an average of 2.7 per cent, whereby policies that support the labor market would increase the average wage and salary of workers for the period 2022-2025 to a better level.
