Bloomberg writer: Putrajaya skirting deflation issue with 2008 talk

On Sunday, Finance Minister Lim Guan Eng used the Global Financial Crisis as a comparison point to assure Malaysians the country was not entering a similar recession. — Picture by Yusof Mat
On Sunday, Finance Minister Lim Guan Eng used the Global Financial Crisis as a comparison point to assure Malaysians the country was not entering a similar recession. — Picture by Yusof Mat

KUALA LUMPUR, Feb 27 — Finance Minister Lim Guan Eng should not have compared the current deflation to the 2008 financial crisis, said a Bloomberg ex-editor.

Former Bloomberg executive editor Daniel Moss said this would prevent the necessary attention on the issue.

“Lim’s Great Recession grenade gets in the way of understanding broader global macro currents. He’s right in a narrow technical sense, yet wide of the mark in a substantive way,” Moss wrote.

He added that a collapse the magnitude of the 2008/09 crisis was not the problem at hand, but rather pervasive low inflation across the region and the globe.

While Malaysia’s CPI decline was not directly comparable to others in Asean, Moss said the pressure was there to respond similarly.

Among others, he said Bank Negara Malaysia would be forced to cut interest rates at the earliest opportunity as the country’s economy was not large enough to either influence global trade or isolate itself from the region’s contagion.

On Sunday, Lim used the Global Financial Crisis as a comparison point to assure Malaysians the country was not entering a similar recession.

Malaysia’s economy entered deflation in January for the first time in almost 10 years since November 2009 as consumer prices declined 0.7 per cent from a year ago.