Mahathir Mohamad, the former premier who steered Malaysia’s recovery from the 1997 Asian financial crisis, expects the current coronavirus pandemic to hit the global economy even harder.
“This is worse than the financial crisis,” he said in a Bloomberg Television interview with Haslinda Amin. “This is really a terrible blow to the economies of the whole world.”
Mahathir joins other world leaders in warning that the virus impact may be worse than past periods of upheaval. European Central Bank President Christine Lagarde this month warned the economic fallout could be similar to the 2008 global financial crisis, while Singapore Prime Minister Lee Hsien Loong said it might be worse.
The 1997 crisis led to widespread financial and political upheaval across Asia. Millions of people fell below the poverty line as economies contracted and currencies plunged, while governments fell across the region. Malaysia emerged relatively better off, with economic growth rebounding in just a year.
Mahathir, 94, is the country’s longest-serving leader, serving as prime minister for about a quarter-century in two stints. He was the architect of Malaysia’s capital controls in 1998, which were widely panned at the time. International Monetary Fund officials later acknowledged that the measures put Malaysia ahead of the curve.
This time, pegging the exchange rate won’t help, Mahathir said.
“Investor confidence is very low not only for Malaysia, it’s for the whole world,” he said in the interview at the administrative capital of Putrajaya. “Because if you invest and you cannot sell, you don’t invest.”
The coronavirus pandemic has disrupted the movement of people and supply chains. Consumers were likely to focus only on food and health products, which may still attract some investments, he added.
Mahathir had ruled Malaysia until he abruptly resigned last month, setting off a power struggle that led to Muhyiddin Yassin becoming premier backed by a loose coalition of parties from across ruling and opposition coalitions. Mahathir expressed doubt over the new government’s ability to steer the country to recovery.
“This is the wrong time to take over the government,” he said. “The country has never been in such a state before.”