Malaysia’s hung parliament sees markets slip, but unlikely to affect growth trajectory: Observers

SINGAPORE: Malaysia’s hung parliament may have shaken markets, but the country’s longer-term growth outlook is unlikely to be affected by the ongoing horse-trading between the political coalitions, said observers. 

Malaysian stocks and the ringgit slipped on Monday (Nov 21), as investors weighed the prospect of more political instability. 

This comes after last Saturday’s general election produced the country’s first-ever hung parliament, where no single political coalition managed to obtain a simple majority of seats to form a federal government.

On the election stalemate, Dr Sailesh Kumar Jha, group chief economist and head of financial market research at RHB Group, said: “No matter which form of government eventually materialises, it is not going to really impact the trajectory of growth.”

Despite the political uncertainties, Malaysia’s economic fundamentals still remain quite robust heading into the next year.

RHB group is maintaining its gross domestic product (GDP) growth forecast at 7 per cent this year, followed by about 4.5 per cent next year. It is expecting the US dollar to trade with the Malaysian ringgit at a range of 4.6 to 4.7 in the fourth quarter, followed by 4.7 to 4.8 in the first half of 2023. 

Dr Sailesh said: “The key message is that whatever form of government does take over, it will be business and investor friendly.”

The deadline has been extended for the coalitions to present their numbers to form the government and propose their prime minister candidates to the palace. They will now have until 2pm on Tuesday to do so. 

Results of the Nov 19 polls showed that Pakatan Harapan (PH), led by opposition leader Anwar Ibrahim, and Perikatan Nasional (PN), headed by former Prime Minister Muhyiddin Yassin, are both in pole position to form the next government, winning 81 and 73 seats respectively.

Source By https://www.channelnewsasia.com/business/malaysia-hung-parliament-markets-slip-growth-3089916