Najib’s roll of the dice – RM60 billion economic stimulus package
What is now being labeled the Great Recession began in mid 2007 as the sub-prime fiasco in the United States began to unfold. The economic slowdown gained momentum in 2008.
As the gathering, storm clouds gathered over the horizon, Governments began to react and take counter recessionary measures.
The Barisan Government for its part remained in a state of denial. Ministers dismissed with some arrogance the notion that the Malaysian economy would succumb to the global slowdown. They argued rather smugly that Malaysia enjoyed a certain immunity as it had decoupled from the global economy. Despite the key economic indicators pointing to a weakening in terms of industrial output, declines in FDI flows, lower exports and indications of capital flight, they continued to forecast robust growth.
The markets for their part made their own assessments and lowered the ratings. The Budget for 2009 presented in August was based on unrealistic and rosy assumptions of growth and buoyant commodity prices, especially of petroleum, and the Government announced a humongous increase in spending both on the recurrent and development budgets. An increase of RM 20 billion was unprecedented.
