Thread by @Trinhnomics

Malaysia update:
*Mahathir resigned - cabinet dissolved & that means delay of all sorts of decisions (including what to do w/ the econ storm brewing)
*Resignation accepted by King & made interim PM until new PM &cabinet formed
*Friday was supposed to be fiscal stimulus unveil day

*The Pakatan Harapan (PH) coalition lost a bunch of supporters & question whether could form a gov (need 112 MPs to be majority of 222 seats); PH composed of DAP (Chinese led), PPBM (Mahathir resigned from that) & Parti Amanah Negara (moderate Islamic)

straitstimes.com/asia/se-asia/m…

Some think that Mahathir'll make a new coalition & may include Umno. Safe to say it's a mess (PPBM I highlighted is what Mahathir resigned from & so lacking PH seats to form a new gov).

Meaning, from an economic perspective, ladies & gents, we got an interim PM without a cabinet

In summary:
*Mahathir still PM, but interim, & NO CABINET
*Basically Malaysia is now weathering the economic storm w/ basically a government ineffective (no cabinet)
*New gov' or election, as per Bridge Welsh
*How to form one? Well, need at least 112 so a lot of politicking atm

Bottom line: A lot of politics but not enough economics in Malaysia at the moment.

😬🇲🇾

Before the political crisis, Malaysia was already growing at the slowest pace in 10yrs at only 4.3% in 2019 vs 4.7% in 2018. Now w/ the corona virus hitting China, Asia & increasingly global demand, we have an interim PM but no cabinet to solve compounding economic challenges.

Houston, we got a problem:
*Domestic demand, not good, investment & consumption weak
*External demand, grim, given the corona virus hitting major markets like China & key commodities (think oil & gas)
*Supply not great as we got supply chain disruption.

Now non-functioning gov!

Malaysia update: Mahathir unveiled fiscal stimulus of 20bn ringgit or 4.8bn USD or about 1.3% of GDP.

It's mostly handouts for tourism sectors & doctors & some repairing & upgrading of infrastructure projects. Delay taxes for some & also lower pension requirement Q2-Q4. So what?

Malaysia update: GDP forecast lowered to 3.2% to 4.2% (@natixis forecasts 3.6% - slashed it when I published the note on the political limbo so lower than the already 10-yr low of 4.3% in 2019).

BNM'll cut & growth still slow despite it all. And I still think Malaysia distracted

@natixis Malaysia political limbo limits its ability to deal with coronavirus fall-out 👇🏻👇🏻👇🏻🇲🇾

@natixis @NatixisResearch