Don: Malaysian economy could be in for hard landing

By Roziana Hamsawi

Published: 2009/04/16

MALAYSIA's economy may experience a hard landing this year but it would not be as bad as Singapore and Hong Kong, said Professor Mervyn Lewis.

Singapore and Hong Kong, being the region's financial centres will suffer far worse, similar to what is being experienced in the UK.

"Countries with the biggest financial market would be badly affected," he told Business Times in an interview in Kuala Lumpur recently.

In economics, a hard landing means a rapid change from a situation of growth to slower growth or even no growth, as a country nears recession.

Bank Negara Malaysia expects a sharp contraction in the first half of 2009, based on the exceptionally high growth Malaysia registered in 2008. Malaysia's economy grew by 7.1 per cent in the first half of 2008.

However, for the full year, it grew by 4.6 per cent in 2008. But this year, the gross domestic product, the sum total of goods and services, could be a high of 1 per cent or a fall of 1 per cent.

The Asian Development Bank also forecasts a 0.2 per cent contraction for Malaysia this year before bouncing back to a 4.4 per cent growth in 2010.

"But Malaysia is not alone. It is not insulated from the crisis just like all other countries including Australia," said Lewis who is a banking and finance professor at the University of South Australia.

He is in Malaysia under the Securities Commission (SC) and University Malaya (UM) Islamic Finance collaboration. He is the first visiting scholar to be attached to UM for a month.

As part of the programme, the SC will host a public lecture by Lewis entitled "An Islamic Economic Perspective on the Global Financial Crisis" today. As part of his stint, Lewis will deliver a series of lectures, help in research as well as provide consultation on dissertations and thesis by post graduate students.