Venue: Auditorium, Sunway University College
Date: 13 March 2009
Time: 3-4 pm
Summary
The talk touched on the global and US perspective on the economy, giving a snapshot view of what is happening around the world. It also touched on the global policy response and the current situation in Malaysia. Additionally, the speaker provided some suggestions and recommendations of what would best be done to improve Malaysian economy.
Detail
Mr. Lee Heng Guie, Chief Economist of CIMB first begun with explaining how US finance its spending and what actually caused the recession. It then went into explaining the policies taken such as how bank deposits are guaranteed in the banking system. He mentioned about the Keynesian theory and that if interest is pushed too low but the economy does not improve, it will fall into a liquidity trap. This, he explained, will not be good, because there will not be confidence in the banking system. So, it is necessary to restore confidence and to stabilize the market as although people defer purchases at the beginning of the recession, spending will return to normal after a period of time, when they find that they still need to make those purchases. Mr. Lee further explained that it is gone as inflation will turn into negative and it should be sustained. He agreed that stimulus plans should be taken, but must be pulled back after the economy starts to recover, so that it does not reintroduce inflation.
He remarked that Malaysia will go into a technical recession as we are export orientated. Furthermore, he commented that the good points about the current situation in Malaysia are that there are more money in the system comparing to prevent slumps, the government is managing their debts well, and having a healthier balance sheet for corporations. He also suggested that the government needs to be transparent with their retrenchment numbers, so that the public are aware of the things that are happening. Mr. Lee states that the future of the economy is in the service sector as it drives youths and the human capital. He believes that the pick up in global growth will be gradual and speedy restructuring of the banking sector and the normal functions if credit markets presentation for sustained market recovery.
Crystal
