COMMENT | Political intrigue leads to capital outflow

Jamari Mohtar & Tam Mei Si

Modified 14 Oct 2020, 10:38 am

COMMENT | Political intrigue can result in foreign net selling, meaning capital flows out from the country which can be inimical for the economy as a whole – with possible knock-on effects on the other variables such as employment levels, currency value, exchange rate and bond yields.

When the political leadership – which includes both leadership in the ruling and opposition coalitions – is distracted by the game of thrones and power play, this undermines economic stability.

A clear example of political intrigue is when a politician makes an unexpected statement about having the majority number to form a government without due respect to the legal process as enshrined in the Federal Constitution, or creates a political drama leading to the dissolution of Parliament with its concomitant snap election being called.

When these political machinations occurred amid a backdrop of a surge in the Covid-19 daily infection figures, this will cause the economic situation to degenerate even worse. As a result, the relationship between political intrigue and capital outflow

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