Based on the strengthening of the greenback and the high inflation reading of the United States (US) yesterday, local economists are still confident and firm in saying that the country is still far from a financial crisis let alone a recession.
Situation of the Ringgit Against the Dollar
According to the Minister of Finance, Tengku Datuk Seri Zafrul Tengku Abdul Aziz, Malaysia does not expect an economic crisis even though the ringgit depreciates against the dollar.
Most recently, the value of the ringgit fell to a new 24-year low after the release of the US consumer price index (CPI) data yesterday witnessed a significant strengthening of the dollar.
He explained that the performance of the ringgit is seen as not 'wobbly' and should be assessed holistically with other trading partners such as Japan, Europe and New Zealand.
This is because even though the ringgit lost 7.5% against the dollar, its value rose 14.2% against the Yen, up 8.2% against the Pound and 4.5% higher against the Euro.
On the other hand, the low value of the ringgit can have a positive effect on the country's exports as explained by Tengku Zafrul that Malaysia can emerge as a competitive exporting country.
Adding excitement, Tengku Zafrul also underlined that Malaysia's economy is still strong with gross domestic product (GDP) growing for 3 consecutive quarters and the unemployment rate shrinking compared to before the pandemic.
Malaysia Recession Prospects
In the meantime, the Chairman of Bursa Malaysia said the country is 'far' from reaching a recession.
Comment by Tan Sri Abdul Wahid Omar even though the world continues to redouble its efforts to curb inflation through aggressive interest rates, Malaysia is not expected to enter a recession phase at all.
In support of the statement, Tan Sri Wahid said the diversity of Malaysia's economic structure, which is flanked by the benefits of pragmatic and responsive policies, is seen to be able to absorb the pressure of inflation and rising world rates.
The main factor to Malaysia's resilience according to him is the stability of the country's financial system.
