Macroeconomic stability drives Malaysia's economic growth

Source: Bernama - January 17, 2020 @ 4:34pm

Macroeconomic stability will drive Malaysia's economic growth this year with Gross Domestic Product (GDP) growth of between 4.4 per cent and 4.9 per cent easily achievable, said IQI Global chief economist Shan Saeed. NSTP/SAIFULLIZAN TAMADI.

KUALA LUMPUR: Macroeconomic stability will drive Malaysia's economic growth this year with Gross Domestic Product (GDP) growth of between 4.4 per cent and 4.9 per cent easily achievable, said IQI Global chief economist Shan Saeed.

The country he said, will continue to be on the global investors' radar due to its solid economic position and importance in the Belt and Road Initiative (BRI).

Shan even predicted the ringgit to improve to RM3.97 against the US dollar this year.

"The global economy is heading for a major slowdown but despite this, Malaysia's economy would demonstrate economic confidence due to strong productivity," he told Bernama, adding that the country still has macroeconomic stability elements of political and economic stability, policy certainty and economic confidence.

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He applauded the government's move to align herself with a technology-driven approach with the strategic intent to enhance productivity through innovation and technology.

"Government is cognizant of the fact that adopting technology will bolster growth in the country and in the Asean region.

Fifth-generation wireless technology (5G), electric vehicle (EV) and artificial intelligence (AI) are on the top of the government main agenda at the moment.

"Top Chinese technology companies like Alibaba and Huawei are already here in Malaysia since they fathom the government's initiative and encouragement," he said.

In the next 5-10 years, Shan said technology-savvy labour force would drive the GDP growth trajectory for many economies globally including Malaysia.

"There's going to be a massive capital expenditure investment in communication like 5G, EV and AI in the Asia Pacific region and the growth rate can be higher in the coming years. Technology is the key variable to achieve solid economic growth in the next 3-5 years," he added.

Shan who has more than 19 years of financial market experience, especially in private banking, risk/compliance management, commodity investments, global economy, brand and business strategy, is confident that Malaysia continues to be on global investor's radar due to her strategic geography and an important player in the BRI equation.

"Strait of Malacca provides a huge strategic competitive advantage to Malaysia's geographical significance. Refined and sophisticated investors value Malaysia's geography due to world-class port structure benefits in the region.

"ASEAN requires US$1.2 trillion in infrastructure investment which has a direct correlation with GDP growth rate," he shared.

Meanwhile on the ringgit, Shan believed the local note would be trading between 3.97 and 4.30 against the US dollar, a forecast based on the premise that the greenback would depreciate further in 2020 due to election year in the United States.

"The US Federal Reserve (Fed) is going to reduce interest rates close to zero since it's an election year and Trump (Donald J. Trump, US current president) is going to push Powell (Fed's chairman Jerome Powell).

"Perusing history, Nixon (Richard Nixon, the US 37th president) and Reagan (Ronald Wilson Reagan, US 40th president) did the same to win elections in the 70s and 80s. US dollar is heading for tail-end risk and getting lowered in its value against a basket of currencies," he added. -- Bernama

Question : What are the issues presented in the article? what is the macroeconomic concept in this article?