LETTERS: Recession and inflation move through phases and, occasionally, we are not even aware that they are approaching.
These two will recur as a result of the business cycle depending on regional internal and external causes or on global uncertainty factors.
We are seeing a worldwide food crisis, as well as supply interruptions that lead to inflation.
How can we know that inflation is happening right now? Just browse the shops and compare the prices of products and services. If the price increases are abrupt, then we are in the midst of an inflation.
Consider the price of cooking oil. All brands have seen hikes in prices by at least 50 per cent.
All we can do is control our expenditure and request for assistance from the government.
We can see the work being done by the Jihad Inflasi team. It demonstrates the government's commitment to helping the people deal with the effects of inflation by encouraging producers to increase supplies and selling some goods at discounted prices.
The team issues warnings to those who hoard food to drive inflation further.
Most nations, including Malaysia, have encouraged their central banks to tighten monetary policy by raising interest rates.
Theoretically, increasing the rates will stop people from asking for loans and deter businesses from applying for loans. Overall, raising the interest rate will result in lower consumer spending.
Europe is facing a natural gas shortage due to a decline in supply from Russia, and the Chinese economy is slowing down as a direct impact of the lockdowns brought on by the adoption of the nation's zero-Covid policy.
The aforementioned elements are some of the primary contributors to the high rate of inflation and market turmoil worldwide.
Thankfully, inflation in Malaysia is still short of the mark. Of course, we are afraid of stagflation, where inflation and unemployment are together in high rates, but historically speaking, stagflation will likely happen if there is a big war like World War 2 (WW2).
The burst of consumer prices and the mass disruption of WW2, as an instance, were the remedies for stagflation. The downturn that brought that inflation to an end was shallow, and it left few scars.
A relatively mild recession should be sufficient to squeeze price rises out of the economy this time, too.
Now, how about a post-pandemic recession, to be exact? Some people might feel enough is enough of what we went through during the pandemic.
The situation is so bleak that a lot of investors are wondering if a recession has already started. It is hard to give an answer. The pandemic has messed up economic indicators.
Consumer confidence has dropped because of inflation, but when asked about their own finances instead of the economy as a whole, people are much happier now that we are already past the pandemic phase.
Still, there is a bright side. The good news regarding inflation is that investors are prepared to take on riskier investments because they believe they will provide higher returns.
A mild recession will help the economy slow down and prices to stabilise, allowing the government to plan a more comprehensive strategy for the country.
HERNIZA ROXANNE MARCUS
Lecturer, Faculty of Business and Management, UiTM, Sabah
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times