More Malaysians fret over economy

(The Malaysian Insider) Malaysians are increasingly worried about their economy in the light of the global financial crisis and continuing political turmoil on the domestic front.

More than half of the respondents to a survey just conducted by the independent Merdeka Centre said they were worried about the prospects for the economy, a sharp jump from the 25 per cent recorded a year ago.

Fifty per cent of the 1,002 respondents said economic issues, such as price hikes, inflation and unemployment, were most important to them. Twenty-one per cent cited political issues as most important, up from one per cent when another survey was conducted in March.

Forty per cent of respondents also said they were “very dissatisfied” with the government’s performance on licking inflation and curbing price hikes, while 41 per cent were ‘very dissatisfied’ with its performance over the economy in general.

Bank Negara governor Zeti Akhtar Aziz warned yesterday that the country’s growth might be affected by the continuing financial crisis in the United States, adding that this was in its early stages.

She said that growth had become ‘more of a concern’ because of falling commodity prices coupled with the US crisis.

The Kuala Lumpur Composite Index, which reached an all-time high of 1,524 points in January, fell to 1,157 after the March elections, which saw the ruling Barisan Nasional (BN) coalition lose its traditional two-thirds majority in Parliament.

Earlier this month, the bourse tumbled to a two-year low of 963, and ended last week at 1,020.53.

The political turmoil, combined with the turbulence in the US financial markets, offered “not much hope” for the market to revive before year end, according to Stephen Soo, a senior analyst at local brokerage TA Securities.

“Investor sentiment is still weak and foreign funds have been pulling out of the market. The political scenario is definitely a deterrent to foreigners,” he added.

Yeonzon Yeow, Kenanga Investment Bank’s head of research, said the country’s economic outlook should be positive, given that the government had presented an economic development blueprint until 2010 under the Ninth Malaysia Plan.

But the continuing turbulence on the political scene has meant that the implementation of projects has been delayed. Prime Minister Abdullah Badawi has also come under intense pressure to step down after the BN’s poor showing in the general elections.

“The economy has been on a downtrend since the general elections. Political uncertainties result in economic paralysis. A lot of time is spent on politics instead of economics. That will slow down the whole process,” Yeow said.

A decision by Umno – the main component in the ruling coalition – to postpone party polls to next year will serve only to further prolong the uncertainty over the country’s leadership and economic situation, he added.

“For the market to revive by the year end would require some form of resolution on the political front,” he said.

But others were more sanguine about prospects, with an editorial in The Edge financial weekly saying that a “significant improvement in growth” was expected next year.

Indeed, the government still expects growth to reach 5.7 per cent this year, despite recent economic woes.

However, the Malaysian Institute of Economic Research – a government think-tank – has cut its growth projection for this year to 4.6 per cent, partly due to the domestic political turmoil. – The Straits Times

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