Malaysia’s economy is not in crisis – BNM Governor
KUALA LUMPUR: Malaysia’s economy is not in crisis and its growth trajectory remains positive, but reforms are needed to make the country an innovation-based economy, said Bank Negara Malaysia (BNM).
Governor Tan Sri Nor Shamsiah Mohd Yunos said the fundamentals of the economy and the financial system are strong and initial steps have been taken to deal with the challenging external environment.
“This is an important fact about the economy and as Malaysians, it is important that we act in an appropriate manner without jeopardizing the recovery and confidence of investors which may cause something that is not true to be believed,” she said speaking at the Khazanah Megatrends Forum 2022 here today. .
In her speech titled “Navigating Malaysia’s Economic Transition in a Post-COVID World” , she said the country’s economic recovery is going well and this year’s growth is expected to be strong.
Inflation, she said, is expected to peak in the third quarter of this year, which is largely due to strong supply and demand in line with the reopening of the economy.
“Upward pressure on inflation will remain partially contained by existing price controls
“Inflationary pressure will continue to rise and will be partially restrained by existing price controls and excess capacity that still exists in the economy,” she added.
She stated that the projections for next year will be more challenging due to a combination of factors such as increased geopolitical conflicts and tensions, global inflationary pressures and volatile financial markets.
“This will all lead to slower growth next year,” she said.
Comparing the current situation with the recent pandemic and the Asian Financial Crisis, Nor Shamsiah said Malaysia’s economy is clearly in a stronger position today based on robust growth momentum, lower unemployment rates, good capitalization of financial institutions and a more diversified economy. .
“This has caused the Monetary Policy Committee (MPC) to gradually adjust the overnight policy rate (OPR) in May, July and September this year, she said.
According to him, the MPC is not constrained by the path that has been set for the OPR and the adjustment to the main interest rate will be done gradually and measuredly.
However, she said, keeping rates too low for a long time like in other countries, could result in disruptions and imbalances, triggering inflationary pressure and weakening the currency.
Nor Shamsiah stressed that Malaysia needs to once again implement reforms that completely transform the economy to ensure a more prosperous and sustainable future in the face of future uncertainties and challenges.
She said Malaysia needs to aspire to be an innovation-based economy, changing from an economic model based on cost reduction (low cost model) to premium maximization.
Efforts towards achieving that ambition have already begun, when the government set key strategies in national policies such as the 12th Malaysia Plan and the National Policy on Industry 4.0, she said.
“The challenge is to transform these plans and blueprints into actions and results. For us is to improve our foundation as an innovative economy, we need to continue reforms to strengthen the foundations of ideas, quality investment, talent, and market dynamism to ensure an efficient distribution of resources ,” she added.
Concluding his speech, Nor Shamsiah said the next one to two years will be important for Malaysia to move forward boldly.
She said the country must now focus on strengthening the economic base, resilience and flexibility.
“Our neighbors in the region are actively pursuing reform measures. We will be left behind if we do not act now.
“History is a lesson. We have many times, done what is necessary to change to be in a higher position. I am sure this time is no different,” she added.
source – BERNAMA