Malaysians overreacting to ringgit's fall and 1MDB issues, says economist

KUALA LUMPUR: Malaysians are overreacting to small issues such as the ringgit's depreciation and 1MDB, says an economist.

"As a foreigner, 1MDB doesn't bother me, it's a small issue and I think the government has plans A, B and C in place, and they will do something about 1MDB," IQI Holdings Chief Economist Shan Saeed told Bernama in an interview.

IQI Group is a property and investment company operating and advising in Malaysia, Singapore, Hong Kong, the UK, the US and Dubai.

Saeed added he is bullish on the Malaysian economy and the government has shown remarkable fiscal brinkmanship in introducing the deficit, while continuing to maintain economic consistency at the macro level.

While the ringgit is trading at 3.7 to the US dollar, in the short run this situation actually helps the manufacturing and service sectors by maintaining trade competitiveness, he said.

Saeed added there is no need for Malaysians to worry about the country's economy as the gross domestic product (GDP) is growing at six per cent at the moment while inflation is at three per cent.

"The inflation numbers in Malaysia are very much subdued, and are under control due to monetary policy. Some economists think fiscal policy has been driving the economy, but they are wrong.

"It has always been monetary policy that drives the economy, and in the last three and a half years I've been in Malaysia, the government has been relying on monetary policy to drive the economy," said Saeed.

Malaysia's GDP, which stood at US$245 billion in 2008, rose to US$322 billion last year.

"There has been an average increase of four to five per cent, which means income levels are rising," he said. - Bernama