IF the Malaysian economy slows, there’s a solution. FM says.

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I love travelling in Malaysia. Okay, sometimes it’s tiring but it’s okay. The money I spend will help to stimulate the local economy. I was in Melaka for the 5th time this year. I love Melaka. I was speaking in Melaka during the weekend and I asked this question to the crowd who came for my talk. “Is the economy doing well?’ A few smiled at me. As usual Malaysians are less expressive even if they have their own opinions. Haha.

I have no idea what’s in their minds but I do know that while everyone seem to be negative about 2020, everyone should also note that thus far no analyst (whether within the government or external ones) have said Malaysia will be in a recession for 2020. In fact the GDP growth predictions have ranged from 4.1% all the way to 4.8% currently with a median of 4.6%. Briefly, no prediction of a recession even if there’s no guarantee that the trade war would not get worse.

Article in malaymail.com . Finance Minister (FM) Lim Guan Eng said that the government may consider introducing an economic stimulus package if the global economy worsens next year. He said, “Actually, I had stated that we would have the space if global economic conditions worsen. We will ensure (there is) space to stimulate the economy as mentioned by (Home Minister) Tan Sri Muhyiddin Yassin. This has been discussed. What he (Muhyiddin) said is right.”

He added, “We will discuss together.” Lim said that within the Budget 2020, the government has already introduced a mini stimulus package via a RM30 credit in the e-wallets of Malaysians to promote use of e-wallets. He mentioned that this allocation alone is RM500 million. It will be coming true within the first few months of 2020. Please do read the news here: Article in malaymail.com .

The reason why our FM says that the RM500 million is also a mini stimulus is because when people spend this money, it will have a multiplier effects on the economy. Assuming it’s a multiplier effect of 4, then this RM500 million will have the effects of RM2 billion. Hopefully, everyone spends it within almost the same period of time so that we can feel the effects more. If it’s spent over a much longer period of time, we will not feel anything.

So, there you have it. If the world gets worse and starts affecting Malaysia more, our FM says that all these are already within their planning. I think what this meant is that quick actions could be undertaken as soon as the numbers start to slow; GDP wise. Happy understanding.

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