Malaysia has been managing its economy quite well compared with its neighbours, and has not let its fiscal deficit go out of control amid recession concerns, according to an academician.
Prof Richard Vietor from the Harvard Business School said being the third largest economy in Southeast Asia, Malaysia has performed well despite the slowdown in global economy.
However, he pointed out that although Malaysia is a trading powerhouse, trade is likely to be a little slow until the United States, Europe and China economies recovers post – COVID – 19.
“I think you are going to see China recovering first. I think Malaysia has got to manage its fiscal affairs carefully and be as prepared as possible to be competitive in the United States and Europe when they recover, ” he said during the “Economic Consequences of COVID – 19” webinar here yesterday.
The webinar was organised by Universiti Teknologi Malaysia’s Azman Hashim International Business School.
The International Monetary Fund chief Kristalina Georgieva said the current crisis posed daunting challenges for policymakers in many emerging markets and developing economies.
She said the pandemic had hit the world economy when it was already in a fragile state weighed down by trade disputes, policy uncertainty and geopolitical tensions.
Meanwhile, Vietor expects the ringgit to depreciate a bit against the US dollar.
“But not by very much, because Malaysia has done better in this crisis than most places, for example, I am already seeing the South African rand and Turkish Lira collapsing.
“I think countries that are weak are going to have weaker currencies, while countries that do not let their debt rise significantly will have sturdier currencies. However, the US dollar is going to remain the exchange currency for a while,” he added.