‘M’sia’s fiscal deficit under control amid recession concerns’

KUALA LUMPUR: Malaysia has been managing its economy quite well compared to its neighbouring countries, and has not let its fiscal deficit go out of control amidst recession concerns in the market, an academician said.

Professor 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 noted that although Malaysia is a trading powerhouse, trade is going to be a little slow until the United States (US), 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 US and Europe when they recover,” he said during the “Economic Consequences of Covid-19” webinar yesterday.

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 US and Europe when they recover. Professor Richard Vietor

The webinar was organised by Universiti Teknologi Malaysia’s Azman Hashim International Business School.

The International Monetary Fund (IMF) 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, on currency, Vietor expects the Malaysian currency to depreciate a little 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. — Bernama