Can Political Instability Hurt Our Economic Growth?

Political instability is defined as the potential for sudden and significant change in the leadership. policies, or condition of a country.

The political parties of any country are supposed to remain dedicated on working for the social and economic development of their countries. This how they should be attempting to please the general people and earn their support.

Their ideas and political activities are expected to be for the betterment of condition of the country and the people, but things like this do not always happen in the desired way. When the political parties of a country take very hostile positions towards each other, then political instability grows in the country. And it hampers the desired economic development of the country. Economic growth and political stability are strongly related.

The uncertainty associated with an unsteadfast political environment may decrease investment and the speed of economic development. Moreover, weak economic performance may lead to government fall down and political instability.

The current events in our country is showing a worrying results, the uncertainty of our Government has raised concern amongst investors. The logic is when a country is stable politically it attracts investors as the changes and uncertainties would not occur and even if it does the political party does all it can to save investors without having to o through much obligations from the opposition. But when the Government is not certain then the investor would avoid and investment because any changes in the Bill or in any emergency case they would not be able to save the investors.

As we are currently going through a transition period and to make things worst the emergence of Covid 19 phase 3, we are afraid that this event could lead to our companies losing their investors. Bursa Malaysia has recently announced that there is a spike in CDS account opening during early this year and we are witnessing the bearish movement in our stock market, will it mean worst to our retail investors? we hope not.

As a precaution we urge people to closely manage their portfolio and have some plans ready to make the necessary trades. The best traders knows how to make money even during the economic fall down.

By Suren Subramaniam | 28 October 2020

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