A report in Asean Today said the World Bank had recently said Malaysia’s gross domestic product growth rate would slow to 4.2 per cent, from the 5 per cent of the previous year.
It also does not see growth rates above 5 per cent in the near future.
The slowdown is largely because of a drop in demand for manufactured goods and the low price of crude oil.
The report said Malaysia’s and the region’s economic troubles were just beginning.
It quoted Sudhir Shetty, the World Bank’s chief economist for the East Asia and Pacific Region, as saying “a sharp global financial tightening, a further slowdown in world growth or a faster-than-anticipated slowdown in China [will] test East Asia’s resilience”.
The Asean Today report said the wider risk of economic slowdown within Asia-Pacific regionally, and particularly in Asean, had led Shetty to believe that “these uncertainties make it critical for policymakers to reduce financial and fiscal imbalances that have built up in recent years”.
The report said “as rumours abound that the (Malaysian) economy is headed towards bankruptcy”, Prime Minister Najib Razak had sought to dispel fears by saying “the country’s economy, even the world economy, has its ups and downs”.
It pointed out that during an interview last month with The Korea Times, Najib had said he wanted to follow South Korea’s economic progress into a “knowledge-based, high value-added economy.”
Najib was planning a different direction for Malaysia’s future economic development model: relying on the knowledge-based sector.
Asean Today said Najib intended to raise the amount of educated and skilled professionals in the country, reducing its need for migrant labour and oil revenue, as well as increasing economic growth and wages through productivity.
Despite Najib’s optimism, many critics believe this transition would take decades.
Many of Malaysia’s large corporations, which make billions through their palm oil plantations and factories, will not be easily enticed to leave profitable industries.
Also, displacing Malaysia’s huge migrant workforce could lead to a humanitarian catastrophe, as the Malaysian Employers Federation’s estimates there are six million legal and illegal foreign workers in the country.
Saying Najib’s knowledge-based economy plan was good, Asean Today asked: “But what about today’s average worker? He needs to get to work on getting people to work, and fast.”