Malaysia needs a stable political ecosystem to face the coming economic challenges, say economic analysts.
Chief Economist at the Future Labour Market Studies (EU-ERA), Associate Professor Dr. Mohd Yusof Saari said Malaysia’s experience has shown that political stability is crucial to efficient economic governance.
“In a few months, we will enter the year 2023 and this means that we are close to facing the global economic crisis phase, therefore, political stability is needed to face the situation.
”The decision to dissolve Parliament to obtain political stability is the right step taken to ensure Malaysia’s readiness to face the economic crisis next year,” he said in his article, “Keperluan Kestabilan Kerajaan Mendepani Krisis Ekonomi 2023-2024” (Need for Government Stability to Face the 2023-2024 Economic Crisis).
He said Malaysia needs efficient economic governance to ensure economic recovery.
“The world economic growth in 2022 was projected to shrink to 2.9% compared to 5.7% in 2021. From 2023 to 2024, the world economy is expected to grow at a rate of 3% per year, which is a situation that is not much different compared to 2022,” he said.
He said the slowdown in the world economy also slowed down Malaysia’s economic growth and pulled down the overall economic recovery process, including the “recovery” of the cost of living.
Political instability since the beginning of 2020, together with the onset of the COVID-19 pandemic, he said, had caused a sharp contraction in Malaysia’s GDP of 5.5 percent, a situation that had never happened since the country achieved its independence.
This, he said, was due to inefficient economic governance during the pandemic period, such as the long closure of business activities.
Meanwhile, EU-ERA economist Prof. Muzafar Shah Habibullah said political stability is very important if Malaysians want to enjoy a comfortable life and a good standard of living.
“Studies prove that political stability can boost a country’s economic growth, whereby a 1 percent increase in political stability will increase economic growth by 0.25 percent and a 1 percent increase in government effectiveness will increase the country’s economic growth by 0.61 percent,” he said.
He said a capable, dedicated, and the experienced government is needed to drive the national economy to achieve the projected GDP growth of 5.0 per year, the unemployment rate of 4.0 percent, and an increase in the average wage and salary of workers as stated under the 12th Malaysia Plan.
Prof. Muzafar said an efficient, experienced, and stable government with effective policies will help maintain inflation at an average of 2.7 percent, whereby policies that support the labor market will be able to increase the average wage and salary of workers for the period 2022-2025 to a better level.
He said studies also show that political stability can lead to higher economic growth, and an effective government will bring the country’s economy to a better level of growth.
“Political stability is very important if Malaysians want to enjoy a comfortable life and a better standard of living,” he added.
Sources: BERNAMA