KUALA LUMPUR, March 1 — The Malaysian economy will weather the next general election and stay robust even with a change in government, renowned world economist Nouriel Roubini said today.
Roubini, also known in the media as “Dr Doom” for his consistently pessimistic economic outlook, gave his prediction today amid previous warnings by names such as veteran statesman Tun Dr Mahathir Mohamad and former top cop Tan Sri Musa Hassan that Malaysia will descend into political and economic chaos should Pakatan Rakyat (PR) wins the next polls.
“I would say whatever the result is going to be, this country has shown institutional and political stability,” Roubini said here in his keynote address at the Datum Economic Forum 2013.
“Investors recognised that, and therefore as long as there is a democratic process, as long as there’ll be policy clarity after those elections, it’s certainly going to be positive.”
Roubini admitted that the electoral process itself will introduce elements of uncertainty for investors, but refused to comment on the election date that has yet to be announced.
“I think whether the decision will be taken imminently or shortly ... whatever those results may be, this is a stable democracy that’s been committed to following economical policies to economic success
“It’s going to be positive,” he added.
Roubini also offered his observation on pre-election practices which are affecting Malaysia’s economic standing.
“Whenever there’s an election, whoever’s in power before elections provides cash handouts to the people as a way of boosting chances of winning, and that increases a chance of deficit in an election year,” Roubini said.
“Hopefully that will be reversed after the election.”
Roubini, who was named as Top 100 Global Thinkers by Foreign Policy magazine, gained popularity after he predicted the United States sub-prime crisis and the subsequent worldwide recession in 2008 three years before it happened.
On January 2011, Roubini’s analysis firm Roubini Global Economics (RGE) commented that much-needed reforms to Malaysia’s pro-Bumiputera policies would likely be put on the back burner until Prime Minister Datuk Seri Najib Razak secures a new electoral mandate.
In the report titled “Wednesday Note — Malaysia’s Middle-Income Malaise” RGE reported that Umno was “unlikely” to revamp such policies “blocking” Malaysia’s rise to high-income nation status before the next general election for fear of antagonising Malay voters.
It also said that affirmative action policies have exacerbated the non-Bumiputera brain drain problem and also created a “strategic disadvantage” for local firms by limiting human and financial capital as well as “perpetuating an unlevel playing field” for entrepreneurs.
Roubini, an economics professor at New York University’s Stern School of Business, previously advised the World Bank and International Monetary Fund (IMF) and currently holds research fellowships at London’s Centre for Economic Policy Research (CEPR) and the National Bureau of Economic Research (NBER) in Cambridge, Massachusetts.