KUALA LUMPUR: Supply chain disruptions, rising inflation as well as the conflict between Russia and Ukraine have raised concerns over the gloomy global economic outlook.
The International Monetary Fund (IMF) has highlighted that higher-than-expected inflation, particularly in major European economies and the US, has triggered a tightening of global financial conditions.
At the same time, amid a fresh wave of COVID-19 cases and lockdowns, China’s slowdown has been worse than anticipated.
IMF Economic Counsellor and Director of Research Pierre-Olivier Gourinchas has said global output has contracted in the second quarter of 2022 as a result.
“The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one,” he said.
What are the chances of a recession in Malaysia?
With stalling growth in the world’s three largest economies, Juita Mohamad of The Institute for Democracy and Economic Affairs (IDEAS) noted Malaysia, as a small open economy, would be vulnerable to global trends
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has also said the country must be prepared for a slowdown in the world economy, despite its strong expansion after the reopening of borders.
The country’s inflation, as measured by the Consumer Price Index (CPI), increased 3.4% in June 2022 from a year earlier, driven by surging food prices.
“Unfortunately, we are anticipating higher inflation rates in the advanced economies of up to 6.6 percent,” said Juita, who is IDEAS’ Director of the Economics and Business Unit.
“But looking at emerging markets and developing economies, the inflation rate might go as high as 9.5% in the coming months.”
This, she said, would reflect the impact of cost pressures from disrupted supply chains and tightening labour markets.
“We do need to brace ourselves for the anticipated slowdown in global growth and global demand in the next coming months."
Cushioning the impact
Global inflation rates may be beyond Malaysia’s control, but it can take measures to ensure its people are less impacted by external shocks.
As such, the country must be prepared with steps to safeguard the economy and society.
Juita said continuous upskilling and upgrading of talents was crucial within the digital economy, particularly for micro, small and medium enterprises (MSME).
While she acknowledged that federal resources have been poured into preparing MSME for digital platforms, Juita added that there must be routine assessments on the performance of such programmes.
“These programmes should not just aim to onboard MSME,” she said. “They should go even further beyond that for sustainability and to ensure that MSMEs are competitive enough to not just enter the digital platforms and digital economy, but to stay there as long as they can.”
Juita also pointed out that there was a lack of continuity with cash transfer programmes in Malaysia, with little to no monitoring on the impacts it had on vulnerable and targeted households.
As such, another area for the government to look into is further developing the country’s social protection system and empowering workers.
“We need to be thinking about inclusivity in terms of social protection, especially when Malaysia is going into the path of becoming an ageing society in the next two decades or so.”
Faye Kwan
Thu Aug 11 2022
Supply chain disruptions, rising inflation as well as the Russia-Ukraine conflict have raised concerns over the global economic outlook.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.
NFOF will be operational in November 2024 with funding of RM1 bil
PM Anwar Ibrahim said NFOF will support venture capital fund managers to invest in startup companies with RM300 million set aside for 2025.
Minimum wage to increase to RM1,700 effective Feb 1, 2025
The Progressive Wage Policy would be fully enforced next year with an allocation of RM200 million, benefiting 50,000 workers.
Bursa Malaysia ends higher on Budget 2025 optimism
The benchmark index, which opened 1.85 points higher at 1,643.29, moved between 1,641.71 and 1,649.31 throughout the trading session.
Five important aspects relating to people’s lives in Budget 2025 - PM
The focus is on driving the MADANI Economy, speeding reforms, cutting red tape, raising wages, and tackling the cost of living.
Economic outlook: Govt plans to leverage, expand existing city transit system
The expansion aims to provide a more efficient and reliable public transportation network, reduce congestion, and improve accessibility.
Economic outlook: Budget 2025 to lay foundation for a digital-driven economy
The report said Budget 2025 will entail efforts to position Kuala Lumpur as a top 20 global startup hub by 2030 through the KL20 initiative.
Economic outlook: Corruption and lack of accountability hinder economic progress
Special Cabinet Committee on National governance is established to curb corruption, law reforms to modernise outdate regulations, MoF said.
National Wages Consultative Council will be strengthened
The govt will also incentivise hiring women returning from career breaks, offer job matching and improve care services facilities.
Economic outlook: Ensuring 11 years of compulsory education for all children
Budget 2025 will continue prioritising upskilling and retraining initiatives to equip workers with the latest skill sets necessary.
Consolidated public sector projected to record lower surplus of RM41.7 bil 2024
The MoF said the consolidated general government revenue is estimated to increase slightly to RM384.7 billion in 2024.
PM announces substantial Budget 2025 hastening Malaysia to become Asian economic powerhouse
Datuk Seri Anwar Ibrahim said it would create jobs and also tackle financial leakages to enhance public spending efficiency.
Fatwa gazetted declaring GISB deviates from true Islamic teachings - MAIS
The ban includes any teachings or practices similar to those associated with GISB.