KUALA LUMPUR, 26 July 2022 – Malaysia’s economy is firmly on a recovery path, supported by solid domestic activities and positive external demand, said Bank Negara Malaysia (BNM)’s Governor Tan Sri Nor Shamsiah Mohd Yunus.
According to her, the country’s economy is expected to grow steadily this year and 2023, despite continuing challenges from rising cost pressures, the military conflict in Ukraine and strict containment measures in China.
“We are benefitting from strong demand for our exports, especially electrical & electronic and commodity-based products. Our diversified export products and markets will continue to support our export growth.
Importantly, we are seeing increased strength in domestic demand and domestic spending, especially consumer expenditure is on the rise. In fact, retail sales, debit card transactions and consumer goods imports have exceeded their pre-pandemic levels,” she said in her keynote address at the 12th International Conference on Financial Crime and Terrorism Financing 2022 (IFCTF 2022) here today.
Nor Shamsiah said the economy is also benefiting from a strengthening job market, adding that unemployment is now at 3.9 per cent compared to its peak of 5.3 per cent in May 2020.
“Almost 26,000 new jobs were created in the first three months of this year, similar to pre-pandemic levels. Job vacancies and wages are also rising. This will further reinforce the recovery in domestic demand going forward,” she said.
Nor Shamsiah also said that the current rising prices is a global phenomenon and for Malaysia, the direct impact of elevated oil prices on headline inflation has been largely dampened by price controls on fuel and essential food items. Yet, she said, there are still indirect effects from high global commodity prices, as they are a key driver of the rise in producers’ input costs.
According to her, inflation developments in Malaysia this year reflect the pass-through of some of these costs, as well as the strengthening of domestic demand.
Consequently, within 2.2% to 3.2% in 2022, core inflation increased to an average of 2.2% in the first six months of 2022 compared to 0.7% in 2021, she said.
“What is important is that by acting pre-emptively, we will be in a position to undertake adjustments to the monetary policy settings in Malaysia in a measured and gradual way to avoid hindering economic recovery,” she added.
This is also to restore conditions that will support sustainable growth over the medium and longer term. To this end, the timing, pace, and extent of rate increases will be guided by assessments of how the evolving economic and financial conditions domestically and globally would affect our inflation and growth outlook,” Nor Shamsiah added.
— Akses Malaysia
