'Whoever wins even once will face a big challenge in leading Malaysia through this economic crisis.'
Malaysia is currently entering the 4th day of the suspended Parliament phase after Pakatan Harapan (PH), Perikatan Nasional (PN) or Barisan National (BN) failed to win a majority of seats to form a government.
However, no matter which coalition party forms the government, market analysts outline some of the challenges that will be faced in bringing the country through a time of 'economic depression'.
Examine the economic challenges of the future Prime Minister and the new government of Malaysia below.
Formulating the 2023 Budget
Once the new government is formed, one of the main agenda items is to enact the 2023 Budget with RHB Investment Bank (RHB IB) saying the election results have created uncertainty.
He commented that the presentation made on October 7 will be void and will require a re-presentation in December by a new Cabinet member.
Also supporting the foundation is Shankaran Nambir, a senior researcher at the Malaysian Institute of Economic Research (MIER) who said the new government needs to 'draft the 2023 Budget'.
A surge in prices and a decline in purchasing power
Among the factors that will be examined in enacting the budget is of course the issue of price spikes and the decline in consumer purchasing power due to inflation.
According to Bank Negara Malaysia (BNM) data, national inflation peaked at 4.5% in the 3rd quarter.
This issue of inflation is not only happening in Malaysia, but has become a crisis all over the world, forcing central banks to raise interest rates.
Depreciation of the Ringgit against the dollar
The string of interest rate hikes, especially by the United States Federal Reserve (Fed), has caused the value of the greenback to strengthen and indirectly push down the country's Ringgit.
So far the Fed has implemented a 3/4 point increase for 4 consecutive meetings while BNM has only implemented a 0.25% increase for 4 times.
The prospect of recession in 2023
Not to be forgotten is the dark picture of the future with various issues arising to hold back national and global economic growth.
Among the hot topics is the possibility of the world entering a recession as expected by the International Monetary Fund (IMF), even though BNM has issued a statement that Malaysia is projected to be safe.
Overall, regardless of which coalition will lead the country, Nambir emphasizes that business-friendly policies and openness to foreign direct investment (FDI) are important.
He explained that any government needs to be business-friendly and as a small economy driven by export-oriented growth and FDI, it is also important to respond to the demands of foreign investors.
Also giving his opinion was MIDF's head of research, Imran Yusof, saying that the inflow of FDI does not depend on political parties but rather on the government's policy as an institution that leads the country.
He added that 'policy stability is important' no matter who heads the ministry of international trade and industry.
