Malaysia is not in a financial crisis and should not be talked into one, Deputy Prime Minister Datuk Seri Najib Tun Razak stressed Monday.
However, the country’s real economy would inevitably be negatively impacted by the current financial challenges, said Najib, who is also Finance Minister.
“While we are confident of the resilience of our financial sector, we are mindful that the financial turmoil in markets elsewhere will bear consequences on the real economies there as well as globally,” he said after opening Khazanah Megatrends Forum.
Najib said from the government’s perspective, managing the impact on the real economy was the top priority while it continued to ensure the integrity of the country’s financial system.
He said the global economic slowdown would have an impact on demand for discretionary consumption which formed a portion of Malaysia’s exports.
“Quite clearly, the tradeable sectors of the economy will be negatively affected,” he said.
Najib said slower growth, which is beginning to be visible, would result in a slower demand for commodities as evidenced in the softening of commodity prices including crude oil prices.
“The decline in palm oil and rubber prices will affect both the bottom line of our plantation companies and smallholders’ income,” he said.
Therefore, he said, the drivers for sustained economic growth would have to come from domestic private investments and continued robust domestic consumptions.
Meanwhile, in Putrajaya, Najib said the country’s economy was fundamentally strong and will not go into recession.
“Malaysia will not go into recession,” he said in his speech at a farewell ceremony for Prime Minister Datuk Seri Abdullah Ahmad Badawi at the Finance Ministry.
Abdullah swapped his finance portfolio with Najib’s defence portfolio last month.
Present at the function were Second Finance Minister Tan Sri Nor Mohamed Yakcop and Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz.
Najib said the finance ministry and its agencies had enough expertise to face the global financial crisis.
Najib said he was fortunate as the Prime Minister had handed over the ministry in a stable state.
“It (the turmoil in the financial markets) is not his doing. The ministry is good and stable,” he said.
He said the prime minister had always placed the nation’s interests first.
“(We) thank the prime minister for his contributions. And I look forward to working with all of you as we are all committed to the nation’s cause,” he said.
Meanwhile, Dr Zeti said there were enough U.S. dollars in the local market for the banks.
Asked if Bank Negara would review interest rates at the Monetary Policy Committee meeting on Oct 24, she said: “You will have to wait for that. We will assess the current economic environment.”