KUALA LUMPUR: Malaysia must enhance its economic resilience in the face of global uncertainties, says Prof Dr Yeah Kim Leng.

The member of the policy advisory committee to the Prime Minister said there is a need to adopt strategic measures to safeguard against volatile financial markets and external shocks.

“From a macroeconomic perspective, Malaysia needs both sword and shield strategies.

“Building resilience means we cannot be overly reliant on external financial flows.

“We must strengthen our savings and surplus to protect against the volatility of global financial markets,” he said during the Political Economy Forum 2024 yesterday.

Prof Yeah also emphasised on the importance of reserve buffers for an open economy like Malaysia, stating that irrational global capital flows and sudden stops could pose significant risks.

He cautioned against excessive borrowing at all levels – government, corporate and personal.

“Borrowing is beneficial up to a certain level of gearing but beyond that, it increases financial vulnerability.

“Leverage is important but we must avoid over-indebtedness which leaves us prone to financial crises,” he said.

Despite Malaysia’s commendable economic progress as an upper-middle income nation with modern infrastructure and a well-educated workforce, Prof Yeah said there is a need for a shift in focus.

“We need to move away from an overemphasis on growth and redirect our efforts towards inclusive growth with increased attention on income distribution for the low-income group,” he said.

This approach, he added, is vital for social stability, reducing income shocks and ensuring that government resources are allocated effectively to build social safety nets.

https://www.thestar.com.my/news/nation/2024/09/19/economist-vital-to-adopt-measures-to-avoid-external-shocks