KUALA LUMPUR: Political stability has contributed to Malaysia's economic growth since its independence in 1957 as well as its recovery from economic crises.

Economist Assoc Prof Dr Mohd Yusof Saari said that since 1961, the nation's gross domestic product (GDP) growth has been on an upward growth trajectory.

Malaysia was one of the 12 countries that were considered low-income that had logged an average economic growth rate of six per cent per year.

Yusof said this had helped the country's socio-economic development and narrowed the income gap.

However, he said political instability since the start of 2020 as well as the Covid-19 pandemic had caused a sharp contraction in Malaysia's GDP, which contracted by 5.6 per cent in 2020.

"The uncertain political environment and economic recession due to the pandemic have put pressure on Malaysia, a situation that had never happened since we achieved independence.

"Inefficient economic governance during the pandemic era, such as long closures regardless of socio-economic aspects, added to the economic 'injury'.

"Therefore, a change in leadership is expected to provide a favourable environment for economic recovery and growth."

Yusof said with the world's economy projected to contract next year and in 2024, this required efficient economic governance.

He said there would likely be a contraction next year, with the World Bank projecting the world economy to grow only 2.9 per cent compared with 5.7 per cent last year.

The Organisation for Economic Cooperation and Development also projected slower growth this year.

The world economy is expected to grow at a rate of three per cent annually in the next two years, a situation that is not much different than this year.

This projection is based on factors that include the Ukraine-Russia war, deepening inflationary pressures and the higher cost of living crisis.

"But what does the projected growth rate of the global economy mean for Malaysia?

"For a small country that is open and dependant on trades, the slowdown in the world economy will hamper Malaysia's economic growth.

"The global economic environment primarily influences the situations being faced by Malaysia.

"During caretaker Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz's 2023 Budget presentation, he said the country's 2022 GDP growth was projected to be higher at an estimated 6.5 to 7.0 per cent.

"The expected slower global economic growth next year will pose a challenge for Malaysia's own economic recovery."

Yusof said it was clear that political stability was crucial for efficient economic governance.

"We will enter a new year in a couple of months and this means that we are close to facing a global economic crisis. Political stability is needed in order to deal with the situation.

"The decision to dissolve Parliament, with the aim of obtaining political stability, is the right step in ensuring Malaysia's readiness to face this economic crisis.

"If the 15th General Election is held next year instead, we are likely to face the double risk of political instability and a global economic crisis," he added.