WE have entered the last quarter of 2022 which, by various data points, will go down in history as Malaysia’s “turnaround year”, after two years of debilitating economic hardship brought about by the pandemic.
We have had three consecutive quarters of economic growth: 3.6% in the fourth quarter of 2021, followed by 5% in the first quarter of 2022 and 8.9% in the second quarter of last year.
Unemployment in July this year was 3.7%, a significant decrease from the peak of 5.3% in May 2020.
Our trade for the second quarter of this year was at a record high of RM1.35 trillion and we are on track to land at the upper range of the 5.3% to 6.3% gross domestic product growth forecast for 2022.
These are all clear, encouraging signs of the economic recovery that we had worked so hard towards.
The government’s policy responses, coupled with the effort of various sectors in Malaysia, have enabled our people to successfully rebound post-pandemic.
But now we must temper our optimism with a dose of realism, as well as prepare our nation and its people for an imminent global economic slowdown in 2023, which will affect small trading nations like us.
The historic rate hikes by the US Federal Reserve to cap its domestic global inflation, is also meant to decelerate its economy, whose repercussions has, no doubt, been felt the world over, including in Malaysia.,
These drastic rates hikes have contributed to a stronger US dollar, affecting most nations trading mainly in US dollar, although global inflation has played a much bigger role in driving up prices compared to the stronger greenback.
Further, it doesn’t help that the war in Ukraine has dragged on far longer than expected, with disrupted global supply chains affecting millions, causing higher prices due to more demand chasing less supply.
Perhaps there is also a need to question the root cause of the world’s current problems.
Have we over-sold the concept of globalisation, with its attendant huge carbon footprint as supply chains chase the lowest cost producers a few continents away? Why is the whole world relying on one single reserve currency?
Is de-globalisation the next megatrend, as more and more countries focus on becoming self-sufficient, especially on food and energy security for their people’s well-being?
Perhaps Asia needs to consider a new world order to safeguard the interest of its 4.7 billion population.
In the meantime, how do we prepare Malaysians for future volatility? How can we build resilience fast?
Since 2020, I have been advocating the long-term view even while being responsive to short-term needs.
The Ministry of Finance’s responsive, responsible and reformist policy-making approach is more important now than ever, particularly in preparing the people and businesses for an imminent global economic slowdown, and an increasing inclination towards de-globalisation by countries such as China, India and the United States.,