By Lee Wei Lian KUALA LUMPUR, May 1 — Malaysia could find itself in the same fiscal mess currently facing several European countries such as Greece if planned economic reforms are not undertaken, says London School of Economics Professor Danny Quah.
Portugal, Ireland, Greece and Spain, the so-called PIGS, are under international scrutiny and have roiled global markets due to their level of national debt. Greece, whose government bonds were downgraded to junk status this week, has a debt to Gross Domestic Product (GDP) ratio of about 115 per cent which could hit 150 per cent by 2012.
Quah, who is also a member of the National Economic Advisory Council (NEAC), said that while Malaysia’s debt to GDP ratio is below that of the PIGS, it isn’t far off either.
“It won’t be too long before we push into PIGS type territory,” said Quah at a dinner lecture organised by LSE alumni last night where he spoke in his capacity as an LSE economist.
He said that Malaysia needs to take out its stimulus spending, implement the New Economic Model (NEM) reforms and ensure that growth takes place in order to stabilise the nation’s debt to GDP ratio.
Quah also cautioned that Malaysia is expected to become a net oil importer by 2014 and that the country is one of the most sensitive to oil price volatility. Read more
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