KUALA LUMPUR: Consumers should be frugal in their spending to be in a better financial shape in the event of a recession.

RAM Consulting Services group chief economist Dr Yeah Kim Leng said people could car pool, postpone buying that extra car and travel domestically.

"Don't make unnecessary purchases but don't stop spending. If everyone stops spending, it won't be good for the economy."

He said the silver lining in the global crisis was the drop in oil prices, which would trigger a price reduction in some items.

This would bring down inflation and increase consumer spending, he said.
However, sectors that could be affected by the crisis were manufacturing and transportation, which meant that the workers could expect a pay cut, he said.

"Some companies will also start cost-saving measures."

It is learnt that one company had started a three-day work schedule.

Yeah said it was unlikely that local manufacturing workers would be retrenched as foreign workers would be the first to go if manufacturing companies trimmed their exports to the US.

He warned fresh graduates not to be too fussy about jobs as companies, in view of the global crisis, may not be hiring.

Manufacturing industry financial analyst Allan Kronenburgh said he could not see Malaysia going into a recession as there was money to go around.

But some people were holding on to their cash, thus, creating an artificial shortage, he added.

"People are prudent, very careful in their spending, avoiding luxury items and preferring to spend on essentials only.

"The man in the street will depend on government subsidies for essential consumer products like rice and bread.

"On the same score, others are not making payments for goods and services rendered, so much so that it is creating a chain reaction: 'If you don't pay me, I don't pay others'.

"But this doesn't happen in the purchase of raw materials which have to be paid upfront."

Those with cash, he said, may take advantage of the situation by buying cheaper stocks on the share market.

"But then again, they are taking a gamble owing to market uncertainty.

"Brokers, however, will make money as long as there is trading with a willing buyer and a willing seller."

However, he expected the market to recover in six months, given the government's commitment to provide financial support.

Daiwa Securities chief Asia economist Presenjit Basu said Asia, particularly Malaysia, could manage itself following its experience in the 1997 global financial crisis.

"Asia is in relatively good shape. Malaysia, for instance, has a massive surplus account.

"It is one of the safest places to invest in."



Malaysian Rating Corporation chief executive officer Mohd Razlan Mohamed said everyone knew and understood the consequences of the global market downturn.

The US and European Union governments have announced rescue packages worth billions of dollars but the market has still to recover.

"This is because the money has yet to get down to consumers. Banks are jittery and reluctant to give out loans easily.

"They want to save themselves from becoming victims of the sluggish economy."

On the local market, he said that despite Malaysia having a strong banking system, it was similarly affected due to several factors like the uncertain political scenario.