Malaysia is poised to reap the benefits of China’s recent economic stimulus initiatives, even if indirectly. The measures, which include reduced interest rates and support for the property sector, are expected to revitalize the Chinese economy, leading to increased consumer demand for goods and services. This could translate into more disposable income for Malaysians and potentially boost travel, as the Chinese economy strengthens.
Doris Liew, an economist and assistant research manager at the Institute for Democracy and Economic Affairs (IDEAS) in Malaysia, highlights that China’s property market measures, such as lower mortgage rates and reduced down payment requirements, could free up funds for consumers to spend on other goods and services. Chinese tourists were among Malaysia’s top five visitor groups between January and June, with 1.44 million arrivals.
While China’s economic stimulus is projected to have a positive impact on Malaysia, experts caution that the immediate effects may be limited. Liew points out that China’s economic challenges, including high youth unemployment, could hinder the effectiveness of the stimulus. Consequently, consumers may remain cautious about spending due to uncertainties surrounding their financial outlook.
The Chinese central bank plans to reduce down payments for second homes from 25% to 15% and cut existing mortgage rates by 50 basis points. Dr. Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd., shared with Business Times that China’s demand is likely to continue driving global economic growth. As a major trading partner, a rebound in China’s economy would benefit Malaysia, particularly in sectors like tourism, manufacturing, palm oil, and oil and gas.
However, Dr. Afzanizam cautions that any positive effects on Malaysia could take time to materialize due to existing challenges within China’s property sector, where a significant portion of the population’s wealth is tied up. He suggests that the sharp decline in Chinese property prices could significantly impact citizens’ wealth, potentially leading to reduced consumption and investment, which could impede broader economic recovery efforts.
