The Bank Negara Malaysia forecasts a modest acceleration of economic growth in Malaysia for the current year, as conveyed in its latest Economic and Monetary Review. The boost is expected to come primarily from household spending and investment initiatives.
According to the central bank, the nation's economy looks set to rise between 4 to 5 percent this year. This follows a 3.7 percent increase witnessed in 2023. As per Datuk Abdul Rasheed Ghaffour, the Governor of Bank Negara Malaysia, this growth can be attributed to swelling household spending, thanks to higher income growth and a boost in employment opportunities.
Nevertheless, Ghaffour also underscored some potential areas of concern. These risks include a less robust global growth than anticipated, the intensification of geopolitical conflicts, and severe disruptions in commodity production due to unforeseen weather events.
Regarding household growth, it's expected that robust income growth will see household spending increase by 5.7 percent. By 2024, unemployment rates are projected to decrease to 3.3 percent.
Investments are also expected to make forward strides with a predicted rise of 6.2 percent. This growth is forecasted to be supported by both new and ongoing multi-year projects across the public and private sectors.
As per central bank's projection, the current account surplus for this year is expected to rise to be within 1.8 and 2.8 percent of the country's GDP. Noted factors for this improvement are an increased goods surplus and a shrinking services deficit due to a steady growth in inbound tourism.
The central bank also expects an inflation average of between 2 and 3.5 percent for this year. Reflecting stable demand conditions and contained cost pressures, core inflation is expected to settle between 2.0 and 3.0 percent by 2024. This figure also takes into account the potential inflationary impact of the implementation of subsidy rationalization, as Ghaffour added.
