Malaysia’s central bank called for an acceleration of structural reforms on Wednesday ( Mar 20 ), with the country’s economy expected to benefit from a rebound in exports and robust domestic spending this year.
In documents released along with its annual review, Bank Negara Malaysia claimed that favorable economic conditions, including average inflation and a projected rise in business activity, opened a window for the government to implement much-needed changes, such as subsidy rationalization.
Malaysia’s government intends to switch from blanket aid to a targeted system that focuses on low-income groups, but has n’t yet decided when to start implementing the measures, which could result in a rise in fuel costs.
In the preface to the main company’s 2023 economic and monetary review, BNM Governor Abdul Rasheed Ghaffour said,” We may be slowly convinced that a great season is ahead of us.
The moment is now for Malaysia to adopt crucial structural changes in order for us to secure our coming in the years to come.
BNM maintained its 2024 growth estimates at between 4 per share and 5 per share, the report showed. Exports were forecast to increase by 5 %, returning from an 8-percent decline last year.
According to BNM, new taxes and changes to electricity tariffs intended to boost government spending were anticipated to have a minuscule impact on prices.
Headline inflation was anticipated to remain stable at 2 % to 3.5 % this year, up from 2.5 % in 2023, despite rising prices caused by price increases caused by price increases and price controls, as well as higher input costs brought on by Malaysia’s weaker currency.
The ringgit has increased after hitting a 26-year low last month, but it is only down about 3.2 % to the US dollar so far this year.
Abdul Rasheed, who has said the currency is undervalued, stressed that reforms which tackled historic structural issues, as well as investments in decarbonisation and large- value industries, may assist support the ringgit and better reflect Malaysia’s robust economic fundamentals.
” We are conscious that prolonged and plastic devaluation of the ringgit, if not addressed, may include permanent implications on the economy”, he said.