UTAR Division of Community and International Networking (DCInterNet) organised a webinar titled “10 evolving facts about Malaysian and the World Economy after the pandemic” on 21 June 2021 via Zoom. The webinar saw more than 220 participants.

The webinar aimed to provide the students and staff with some evolving facts about the global and Malaysia economic updates and trends. From the webinar, the participants got the chance to understand the cause-and-effect relationships in the economy.

Invited to deliver the webinar was Faculty of Business and Finance (FBF) Department of Economics Assoc Prof Dr Wong Chin Yoong. Moderating the webinar was FBF Department of Finance lecturer Liew Feng Mei.

Dr Wong kick-started the talk by providing updates on the Covid-19 pandemic. He said, “Based on the three important trends shown by the Covid-19 statistics, we can be more or less conclude that the Covid-19 as a global health crisis is likely to be behind us.”

“Firstly, there is a dramatic decline in the number of new cases per day in all the continentals in the world such as South America, Europe, North America, European Union, Asia, Africa and Oceania compared to last year. Secondly, the decline of number is close to zero levels compared to last year as last year even though the number of cases was falling but the number of cases was still far away from zero levels. Lastly, the progress of vaccination in regions from all over the world is giving us hope.”

The decline in the Covid-19 cases was followed by the easing of various mobility restrictions all over the world.

“Speaking of the global crisis in the year 2020, let’s take a look at the world map on the left-hand side; the red colour (referring to the world map) indicates regions that faced a decline of more than 3% in the Gross domestic product (GDP). However, the right-hand side of the map (referring to the year 2021) shows that almost all the regions are highlighted in green. Overall, the two maps indicate that the GDP all over the world is recovering and is led by China and the United States,” said Dr Wong while presenting the maps.

After explaining the two evolving facts about the world economy and the Covid-19 pandemic, the third fact explained by Dr Wong was regarding the financial euphoria and bubbles that will reoccupy properties and stock markets. During the pandemic period, the prices of properties in the United States and China hiked up crazily. The craziness of price increasing also appeared in the United States and China’s stock market. Since the two largest economies in the world are China and the United States, the phenomenon that takes place in their properties and the stock market also influences other economies in the world.

The fourth fact mentioned by Dr Wong was relating to the safe asset interest rate. He told the participants that the safe asset interest rate is more likely to remain low, though not lower. Because of the rescue plans by the United States government, the households in the United States saved more money during the pandemic period. Besides, many investors have observed the potential of the United States Treasury Bond as a safe asset, so when the bond started to pay a higher interest rate, many investors were willing to shift their money from other investments into the United States Treasury Bond.  

He said, “The treasury bond in developing countries also showed an increase in the interest rate. However, the increase of treasury bond’s interest rate actually placed more burden on the governments around the world as these authorities have to spend a lot of money to save their country’s economy. They also had to pay more interest rate for the treasury bond.”

Speaking of inflation, Dr Wong explained, “When they say ‘Inflation is back!’ it is a false narrative. However, the average inflation is going to be marginally higher, which can be a good thing. We have been facing low inflation closer to zero levels for several years, so the increase of inflation to 2.5% - 3% is good as the central bank will increase the interest rate for deposit saving. Even though the economy recovers, if the inflation is not high, the central bank will not adjust the interest rate to a higher level.”

Recently, Bitcoin became a popular topic especially when the price increased from 10k USD to 60k USD per Bitcoin. According to Dr Wong, Bitcoin will never be used as means of payment.

He explained, “Bitcoin is not a physical object and there is no company behind the security. Thus, with its charging price, it can be dangerous to use it as a tool for payment.” However, Dr Wong admitted that Bitcoin is a successful investment method because the reward is high. He said, “Bitcoin is for you to save or to earn more, but not for paying. But the virtual currency or the e-currency can be a trend of future payment as the central bank themselves will issue their own virtual currency.”

During the webinar, Dr Wong also spoke about the trade between China and America, as well as the prediction of economic recovery in Malaysia. He stated that, regardless of all the political conflicts between China and America, economy wise, China and America are still tightly co-depending. During the Covid-19 pandemic period from the year 2020 to 2021, the trade between China and America grew even faster.

Speaking of Malaysia’s economic recovery, he said, “A lot of people are trying to forecast the recovery of the economy in Malaysia. For me, I do not worry about the economic recovery because no matter what Malaysia’s economy will recover. For the short term, Malaysia’s GDP might go from 5% to 6%. But I am worried about the uneven recovery of Malaysia’s economy.”

“From the statistic, the 2021Q1 (2021 Quarter one) Growth Performance showed that only those sectors which can do export or professional services are achieving strong growth during or after the pandemic. These developing sectors include Finance, Insurance, water, sewerage and waste management, manufacturing, motor vehicles, information and communication, government services, retail trade and wholesale trade. On the other hand, those sectors which are in trouble are those serving the local activities and doing business that is not involving export, such as accommodation, food and beverage, real estates and business services, transport and storage, construction, mining and quarrying, electricity and gas,” explained Dr Wong.

He also further explained why the uneven recovery of the economy matters. “The uneven recovery of economic matters because it further widens the wage gap between tradable and non-tradable sectors. Even the tradable wage is yet to rebound. More than 60% of Malaysians are working in sectors that serve the local economy, so it means that the majority of Malaysians will still have tough years ahead of them because they cannot share the fruits of economic recovery.”
Towards the end of the webinar, Dr Wong told the participants that Ringgit Malaysia will likely be continuously weak and the habit of dissaving will also be a real threat to Malaysia’s post-pandemic economic recovery.

The webinar ended with interactive Q&A and group photography sessions.