KUALA LUMPUR: Advanced and emerging economies need to lift growth trajectories and search for sustainable growth factors that can rebuild economic fundamentals, while addressing structural vulnerabilities and forge new sources of growth, says Bank Negara Malaysia.
Governor Tan Sri Zeti Aziz Akhtar said those countries need to be prepared as the current global economy is confronted with an immensely challenging environment.
“Key is the “sustainability” and strengthening of the growth and development of the world economy,” she said in her speech at the official opening of the World Bank Group Knowledge and Research Hub here today.
An important aspect in this process is that economic growth and development, no matter how stellar, will begin to fade when inequality sets in and when income disparities widen, Zeti added.
“A slower than anticipated growth in several major economies, the sharp decline in commodity and energy prices, the significant shifts in global liquidity and the heightened geopolitical tensions are having far-reaching and widespread implications.
“Experience has also shown that financial crisis and economic recession entrench the cycle of poverty,” she said, adding that during a financial crisis, the poor lose their income by several times more compared with the average household.
“We saw this happen during the recent Global Financial Crisis, and we also saw how many that were displaced suffered “hysteresis” thus deeply affecting their income prospects.
“In more recent years, the international community has accorded greater attention to addressing this agenda and to achieving more balanced and inclusive growth,” she said.
Zeti said Malaysia, while achieving growth and progress since the 1960s, has always given attention for it to be a shared prosperity.
Given the role of the financial system in facilitating this, Zeti said the central bank has always given priority to the financial inclusion agenda to not only bring the underserved segments of society into the financial mainstream but also to promote a more effective participation in the financial system.
This, she said, would in turn strengthen the potential for enhancing economic well-being.