PETALING JAYA: It is advisable for the people to explore supplementary income options or cut down on unnecessary spending, economists said.
Economists said this following the fall of the ringgit against the US dollar recently.
Universiti Tunku Abdul Rahman economics professor Wong Chin Yoong said the sliding ringgit may not impact the lives of the ordinary rakyat in a major way.
“It has no doubt that a weaker ringgit makes imported consumption goods more expensive. The question is, to what extent?
“Imported consumption goods account for only about 7.5 percent of total final consumption, leaving aside the fact that local distributors of imported consumer goods are likely to absorb part of the higher cost,” he told Malaysiakini.
The impact of the sliding ringgit can, however, be seen in making industrial upgrading difficult as the cost of imported capital goods and hiring foreign talents go up, he said.
Meanwhile, Sunway University economics professor Yeah Kim Leng assured that while the fall in ringgit value signifies a decline in purchase power, it is not necessarily associated with currency crisis such as the Asian Financial Crisis in 1998.
As long as the currency slide is not the result of a structural or fundamental problem that eventually leads to a collapse of the market or economy, the exchange rate acts as a shock absorber and helps in restoring equilibrium in the economy,” Yeah told Malaysiakini when contacted.
To cope with the situation, Yeah proposed having an income that is “high enough” to cope with rising inflation and higher prices of imported items, or using cheaper substitutes for imported goods.
“Low income or wage earners will likely need to explore supplementary income sources. Otherwise, consumers will have to consider ‘expenditure-switching’, that is, to change the composition of spending on locally produced and imported goods and use cheaper substitutes,” he reportedly said.
