KUALA LUMPUR: Finance minister Tengku Zafrul Aziz has dismissed claims that Malaysia is in an economic crisis, but cautions that 2023 will be a challenging year for all countries.
Tengku Zafrul told a press conference here that Budget 2023 will need to include measures to mitigate the coming slowdown in the global economy.
“Next year will be challenging. What is happening in the US, China, and Europe will have an impact on the global economy, including Malaysia,” he said.
He noted that some of the effects of the 2008 financial crisis had been mitigated by an 8% growth in China’s economy, but said all major economies were expected to slow down simultaneously next year.
“(The economies of) Europe, the US and China are all expected to slow down in 2023 compared to 2022, but this is, again, just a forecast. It’s only September.”
In dismissing claims of an economic crisis, Tengku Zafrul pointed out that the country’s gross domestic product (GDP) had seen a positive growth of 5.0% in Q1 and 8.9% in Q2, this year.
He added that based on the recovery rate, the country’s economic growth is expected to surpass its initial forecast.
Tengku Zafrul compared the nation’s current circumstances with the situation during the Asian Financial Crisis in 1997.
“In 1997, the ringgit fell by 53.8%, while interest rates went up to 11% and GDP was also down by negative 7.4%. Interest rates are currently at 2.5% and GDP is 8.9% in Q2.
“So we know what a crisis (looks like), we were in one in 1997. In a crisis, interest rates will go up 11%, our currency will decline by close to 54%.”
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