Hence, it was imperative that the Government manages the country's economy well, they stressed, noting the fact that Malaysia, as an open economy, would inevitably feel the impact of volatility and risks stemming from the slowing world economic growth, rising geopolitical tensions, weakening crude oil prices and ongoing currency war.
"A lot depends on how we manage our economy … we have to be vigilant, watchful and take action as soon as we can if the situation turns worse," he surmised at Asli's 17th Malaysia Strategic Outlook Conference here yesterday. The annual conference was themed Forward Malaysia: Which Way Malaysia? Where Do We Go From Here?" this year.
"This is a time of opportunities and challenges for Malaysia. The question is how to get the best out of the situation and rise to the top," Navaratnam said.
According to Penang Institute chief executive officer/head of economics Dr Lim Kim Hwa, confidence was key to any economy, and the lack of it could perpetuate a crisis.
Lim said the two big global themes currently affecting Malaysia's economy were the oil price war, which had resulted in the drastic fall of the price of the commodity, and the currency war, which had seen several advanced economies undertaking monetary policies to deliberately weaken their currencies.
"A depreciating currency can be dangerous. While over the short term, it can help the economy in terms of boosting export competitiveness, over the longer term, it cannot promote sustainable growth and might delay policymakers' efforts to implement structural reforms," Lim said at the same conference.
According to Affin Hwang Investment Bank head of retail research Datuk Dr Nazri Khan, the weakening ringgit is a "dangerous catalyst" to the market.
"The concern is if the ringgit were to depreciate further, would there be any downgrade by the sovereign rating agencies?" Nazri said, adding that he hoped Bank Negara would intervene to stop the further weakening of the ringgit.
The ringgit had weakened 2.24 per cent year-to-date to end at 3.5972 against the US dollar yesterday. This was due mainly to expectations of a higher interest rate in the United States in the latter part of this year and the recent collapse in crude oil prices.
Global benchmark Brent crude oil was traded at US$48.30 (S$64) per barrel yesterday, down more than 50 per cent from mid-June 2014.
According to Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew, as a developing economy, Malaysia would be viewed through different lenses from developed economies, whose economic indicators might be far less healthy than that of Malaysia.
"We do not have room to suffer a loss of (investor) confidence, so maintaining confidence is very crucial for the country," Pong said.
He said foreign investors still perceived Malaysia as a commodity-driven economy, largely dependent on crude oil and crude palm oil. The recent drop in crude oil prices, therefore, gave investors the perception that the country's economy was under a great deal of stress, he added.
While Nazri acknowledged that Malaysia's economic fundamentals remained sound with strong foreign exchange reserves, a healthy current account surplus and a resilient banking system, among others, he said the high indebtedness among the households and the Government could constrain the country's economy.
Lim, on the other hand, said Malaysian households would be challenged by a higher cost of living due to inflationary pressure and the implementation of the goods and services tax (GST) in April. He expects the middle-income group to be the worst-hit by the implementation of the GST.
Meanwhile, IQI Group Holdings chief economist and investment strategist Shan Saeed had a more optimistic view on Malaysia, noting that the country's economy remained on a healthy path and would benefit from the eventual rebound of commodity prices.