Conclusion
- Brexit raises fears of a global recession and financial contagion
- Brexit uncertainty will escalate the risk of recession in UK. Prolonged negative spillovers will dent the recovery of the EU
- Prompt policies intervention to safeguard financial stability as well as adopting pro-growth measures
- Malaysia will be affected via both trade and financial channels but should remain manageable
- Malaysia’s decent economic growth has been propelled by the strength of domestic demand, albeit slower amid anemic export growth
- Amid the limited fiscal space, selective and targeted fiscal spending programmes are expected to cushion domestic economy
- Bank Negara Malaysia’s policy priority is to safeguard financial stability. A cut in interest rates is warranted if the downside risk to GDP growth rises
