Political stability strengthens economy, boosts investors’ confidence – Economist

KUALA LUMPUR – Political stability adds strength to the economy and boosts investors’ confidence in the country, said Juwai IQI global chief economist Shan Saeed.

“Political stability is part of macroeconomic stability and is embedded in the equation. It is perhaps the most important variable in the macroeconomic calculus.”

It is of no secret that global investors also value countries with a stable government with strong policy framework, he told Bernama in a recent interview.

“People have confidence in the stable government with strong mandate to run the economy and to meet stakeholders expectation to deliver economic results to improve the living standards and income levels.”

Experienced policy makers will also add value to it, he added.

Meanwhile Bank Islam Malaysia Bhd chief economist Firdaos Rosli said a stable government is always preferred for confidence building at all levels.

“In the event political uncertainties start to manifest or reach a turning point that could hinder legislative processes, the government could initiate a confidence-and-supply agreement to ensure the smooth running of the government machinery.

“It was a proven strategy throughout Prime Minister Datuk Seri Ismail Sabri Yaakob’s administration,” he said.

Vaccination was key for economic driver 

Shan said  Malaysia has done fairly well in terms of getting people vaccinated and is recognised by the World Health Organisation and other healthcare bodies. 

He said the border opening was a sagacious move from the government considering that 98 per cent of the population got vaccinated and Malaysia was ahead of her neighbours in the south and the north.

“The border opening sent positive signals to the market that the Malaysian economy and its people were ready for business to kick-start the economic momentum at a faster rate to achieve the desired economic recovery.”

Firdaos said the economy this year is poised to perform better than last year.

The country continues to record strong Gross Domestic Product (GDP) growth in the third quarter (Q3) of 2022 after posting stellar growth of 14.2 per cent from 8.9 per cent in Q2 and 5.0 per cent in Q1 respectively, thanks to the border reopening since April 1, 2022.

The stronger footing for Q3 2022 was supported by continued expansion in domestic demand, firm recovery in the labour market, robust electrical and electronics (E&E) as well as non-E&E exports and ongoing policy support.

“However, GDP growth is expected to moderate in the fourth quarter of 2022 as the base effects taper off while downside risks from the external environment become more apparent. We expect Malaysia’s economy next year to grow at 4.5 per cent,” he added. – Bernama / pic TMR File