MIER chief: Don’t depend fully on domestic private consumption
KUALA LUMPUR: After being the key driver of the country’s economy in the last few years, domestic private consumption may experience “fatigue” as it represents household structural issues that are yet to be resolved.
Malaysian Institute of Economic Research (MIER) executive director Dr Zakariah Abdul Rashid said structural issues can turn into a crisis if measures are not taken to mitigate them.
“The economy cannot continue to fully depend on private consumption as the main driver... steps must be taken to find other sources for it to remain diversified and sustainable in the long term.
“The household debt, which is still high at between 80 and 84 per cent, is a crucial issue... we are still dealing with a long-term solution and cannot be resolved in the short term.
“Bank Negara Malaysia’s move to lower the household debt back then was the right call, but it is still a lingering problem,” he said.
When asked for MIER’s 2019 gross domestic product forecast, he offered a lower growth figure of 4.5 per cent.
“In the first half of this year, we expect the economy to be even slower,” he said.
On the recently-announced Economic Action Council (EAC), Zakariah said it was the right move to make.
“The issues we are facing currently need structural changes, and we need more than a single or individual ministry to resolve the problems. They are too complex to be dealt with individually.
“Therefore, a concerted effort needs to be formulated so that a more comprehensive and impactful resolve could be carried out as a result of the meeting of the council members across all ministerial boundaries,” he explained.
Last Monday, the Prime Minister’s Office announced the setting up of the EAC chaired by Prime Minister Tun Dr Mahathir Mohamad.
The 16-member council will scrutinise and make decisions regarding economic and financial affairs, as well as the welfare of the people.