KUALA LUMPUR: Malaysia is vulnerable given the weaker global growth outlook but it has a diversified economy which will enable it to weather the uncertainties said Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz.
But it is not a weak link in the region. She dismissed a suggestion that neighbouring countries viewed the current weakness in the ringgit and placed Malaysia as the weak link in the region, raising the risk of a contagion (similar to the baht weakness before the Asian Financial Crisis).
“They should assess what we look like and highlight what areas of vulnerability they think we are facing. We have surpluses in the current account, solid financial system and well developed bond mart and our growth, although moderated, is still at favourable given the global outlook.”
Any assessment which has placed Malaysia’s vulnerability as due to its position as a commodity and oil producer should also take into account the current make up of the economy which is now 80 per cent made up of manufacturing and services.
She was speaking at a media briefing after presenting a keynote address at the Malaysia-OECD High-level Global Symposium on financial Well-being.
On the weak ringgit, Zeti said areas of vulnerability and uncertainty need to be resolved in the domestic environment.
“This will provide confidence to Malaysians and non- residents who are participating in our economy and that we have a sound financial system and that the underlying foundations of our economy are strong.”
She also reiterated that the ringgit should not be repegged to the US dollar again, warning that such a move would lead to greater costs on the economy on the back of adjustments to prices or demand conditions.
As to whether the ringgit would remain at same level till year-end, she said there were a lot of uncertainties.