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Malaysian budget failure could see leadership change

Wednesday, January 21, 2015

Significance

Najib denied that Malaysia faced an economic crisis akin to that of 1997-98. The budget revision reaffirmed the government's commitment to the Goods and Services Tax (GST), to be introduced in April, liable to raise much-needed revenue, but reduce demand.

Impacts

  • If the government's revised budget plans fail, Malaysia's sovereign rating may suffer.
  • A lack of international investor confidence would compound Malaysia's economic difficulties.
  • Economic diversification efforts could take months or years to bear fruit.
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