In a statement today, Malaysian Rating Corporation Bhd said that given the government’s limited fiscal space, the private sector could play a critical role in ensuring that the Malaysian economy remains intact in the long-term.
“This is because experience from GFC shows that a slow pick-up in lending growth was a key reason behind the sluggish economic recovery despite the massive liquidity injections by its Federal Reserve through its quantitative easing policy,” the statement read. MARC said based on the 2009 recession, loan approvals for businesses in the banking system had fallen on an average of 28 per cent between mid-2008 and mid-2009.
The setting up of Dana Modal, Dana Harta and the Corporate Debt Restructuring Committee has helped banks to re-capitalise and restructure bad debt so that they could continue lending to businesses. MARC, however, noted that with the likelihood of a spike in the jobless rate this year, household balance sheets could come under pressure as incomes deteriorate and lending from banks decline.
Source: Financial Digest (financialdigest.net)
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