Sin Chew Daily

Malaysia's GDP grew at 4.3% last year, the worst in a decade, showing that the local economy is bracing for more challenges ahead.

As if that is not enough, the untamed spread of the coronavirus outbreak will deal an additional blow on the global economy, putting the Malaysian economy under heftier downward pressure this year, with the first quarter expected to be the worst hit. Such negative signals need to be looked into seriously and Malaysians are looking to the government for effective solutions that will propel economic expansion.

During the last quarter of last year, the country's GDP expanded at a significantly slower rate of 3.6%, down from the previous quarter's 4.4% and far below market expectations. The government had anticipated an annual growth rate of 4.7% for 2019, but the latest data came as a big disappointment for many.

The lackadaisical performance of the final quarter of 2019 could be attributed to global trade fluctuations as well as disruption in commodity supply. Into the new year, the local economy is poised to face even tougher challenges as a consequence of coronavirus outbreak.

Although experts have predicted that the outbreak will end in April, WHO has said it is premature to talk about peaking or end of the viral outbreak at this juncture.

In other words, there are still plenty of uncertainties in relation to the development of the outbreak that does not call for more optimism. In its stead, we need to be cautiously preparing ourselves for any possible eventuality.

In addition to COVID-19, Malaysia should also watch out for the impact from the US-China trade war and its follow-up developments. Although the two superpowers signed the first phase of trade deal last month to mitigate the trade conflict, it nevertheless was just a temporary truce and we are still a long way from actual end of the trade war. Once the trade war fire is reignited, the global economy is bound to take the brunt once again, and as part of the globalized economy, Malaysia will not be spared from its scourge.

To lift the sluggish national economy, Bank Negara took the preemptive step of lowering the overnight policy rate (OPR) from 3% to 2.75% on January 22. Bank Negara governor Datuk Nor Shamsiah Mohd Yunus said recently that the central bank had ample room to adjust the OPR, sparking speculations it would announce a rate cut again in March.

Generally speaking, lower interest rate helps boost economic development, but additional solutions are necessary if we want to attain more desirable results.

In the face of tough economic challenges ahead, it is imperative that the government come out with an economic stimulus package as soon as possible. It is learned that the prime minister will announce such a package on February 27, and hopefully the stimulus package will boost consumerism and overall market sentiment while relieving the downward pressure and risks on the national economy.