Opinion | Malaysia’s economic challenge shows how politics has become a bottleneck for growth
- Even as emerging market economies like Malaysia grapple with the repercussions of the pandemic and Ukraine war, they tend to put off the more difficult structural adjustments necessary for growth
- In Malaysia, meagre private-sector investment stems from a lack of confidence in government policies on labour, education and training, and its commitment to inclusive development
Looking ahead to the end of the Covid-19 pandemic and the Ukraine war, what comes next for emerging markets like Malaysia? What policies would help these economies become more resilient and position themselves well to deal with environment, social and governance (ESG) requirements and geopolitical tensions?
The pandemic has exposed our social injustices, with the poor and underprivileged denied adequate access to vaccines, the internet, finance, safe jobs and secure income.
The perfect storm of the pandemic, Ukraine war and climate warming has exposed all the structural defects in national and global economic policies that were not corrected in the aftermath of the 2008 global financial crisis.
Rich countries used loose monetary and fiscal policies to avoid the political pain of fundamental structural adjustments in labour, technology and social areas. Printing money through quantitative easing was painless.
Policymakers did not raise taxes, but increased welfare payments to keep the masses happy. As former president of the European Commission Jean-Claude Juncker once said, honestly for a politician: “We all know what to do, we just don’t know how to get re-elected after we’ve done it.”