Najib says country can leverage on its experience in dealing with the 1997/1998 crisis
MALAYSIA is well prepared to handle the current global economic turbulence due to its experience in addressing the Asian economic and financial crisis of 1997/1998.
Prime Minister Datuk Seri Najib Razak said at the time, the government had responded positively to the crisis with better governance, stronger banks, capitalisation and liquidity and accommodating monetary policies.
"We are better protected against the credit crunch, having suffered one before. The government's successful management of the economy then meant that Malaysia was fortunate to emerge from the credit crisis in a position of relative strength," Najib said in his closing address at the Khazanah Megatrends Forum 2012, here, yesterday.
Najib, who is also the finance minister, said in many ways, Malaysians were fortunate that the country had been in that situation before.
"The Asian economic crisis in the late 1990s caused us to take a good hard look at the structure of our financial systems," he added.
He said the global financial crisis four years ago remained a significant event of the global economy.
The country's continued prosperity was not certain in 2008 as demand was dampened by a downturn in household spending in consumer countries.
Producing countries such as Malaysia - home to a thriving electronics manufacturing sector - were exposed to the recession, which had affected the commodity markets, prices and demands.
"Nor has the threat of a contagion been wholly contained either. Our economies are more closely linked than they were in 1997.
"With the opening up of market and the emergence of high frequency trading, the potential for regionals shocks to spread fast, far and wide is greater than ever."
He said the country's growth this year is expected to remain strong at between 4.5 per cent and five per cent. Next year, Malaysia's gross domestic product is set to surpass a nominal RM1 trillion for the first time.
This strength, he said, is what allowed the government to deliver the 2013 Budget last week that is responsive to the people's needs and also fiscally responsible.
"We made a commitment to cut the fiscal deficit from 4.5 per cent to four per cent next year with a medium term target of three per cent by 2015."
Najib said 2013 Budget was not just about current fiscal spending targets but also for the country's future.
The budget is aimed at addressing various issues, such as on remaining competitive, securing more investments and capitalising comparative advantages.
"With the global slowdown expected to continue, East Asia and the Pacific need to reduce their reliance on exports and rebalance towards domestics demand by investing in productivity increases," he said, citing a recent World Bank report.