Friday 29 Mar 2024
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KUALA LUMPUR (Nov 11): Bank Negara Malaysia (BNM) Governor Tan Sri Nor Shamsiah Mohd Yunus has warned that Malaysia will sail into a challenging economic climate in 2023, as the worsening supply chain, geopolitical uncertainty and market volatility could upset growth.

She said the higher inflation in the domestic front also remains a primary risk to growth which is likely to erode household spending power and reduce investment activity.

But the governor said that while both internal and external risks persist, the country is not heading towards a recession in 2023.

“For 2023, we do see some challenges to growth, especially from the external front with global growth slowing, but I would like to stress again that we are not expecting a recession.

“The economy is expected to expand 3%-5% supported by domestic demand, particularly private sector spending that will result in continued improvement in the job market."

She further stated that Malaysia’s diversified export structure will cushion any downturn.

The central bank head said core inflation is expected to remain elevated in 2023 amid both demand and cost pressures, as well as potential changes to domestic policy measures.

“For 2022, headline inflation is expected to average at 3.3%, after moderating from its third quarter peak through the remainder of the year.

“Core inflation would remain elevated for the remainder of 2022, averaging closer to the upper end of the 2%-3% forecast range in 2022. This is due to some demand-driven price pressures amid the high-cost environment,” she said.

The International Monetary Fund (IMF) on Oct 11 slashed global economic growth to 2.7% next year, down from 3.2% this year, in its latest World Economic Outlook report.

The agency also said “the worst is yet to come, and for many people 2023 will feel like a recession”, adding more than a third of the global economy will contract this year or next.

The three largest economies — the US, the European Union, and China — will continue to stall, IMF warned.

Edited ByLam Jian Wyn
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