Kuala Lumpur (VNA) – Malaysia will likely gain indirect benefits from China's recent stimulus measures, which include interest rate cuts and property market support measures, as a stronger economy spurs demand for goods and services and more disposable income for travel.
Economist and assistant research manager at Malaysia’s Institute for Democracy and Economic Affairs (IDEAS) Doris Liew said that the property market support measures in China, such as reduced mortgage rates and downpayment requirements, could free up funds for consumers to spend on other goods and services.
Tourists from China were among top five tourist arrivals for Malaysia for the January-June period, bringing in 1.44 million tourists. China's economic stimulus can have some positive implications for Malaysia, the immediate impact is likely to be muted.
She explained that the overall weakness of the Chinese economy, coupled with high unemployment rates, particularly among young people, may limit the effectiveness of the stimulus. Consumers may remain cautious about spending due to uncertainty about their future financial stability.
For the property market, the central bank will slash the downpayments for the second home purchases from 25% to 15% and existing mortgage rates for around 50 basis points.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid told Business Times China's demand is likely to remain instrumental in driving global growth. China is also a major trading partner for Malaysia, the recovery in China's economy would be positive for Malaysia. This includes sectors such as tourism, manufacturing, palm oil, oil and gas.
However, he said the impact to Malaysia will take sometime due to the weaknesses in the country's real estate markets as bulk of China's citizen wealth resided in the property sector.
Therefore, he said the sharp fall in house prices would have serious impact to China's wealth, which in turn, have an adverse impact to consumption and investment./.
