KUALA LUMPUR (July 12): Malaysia is ready for any eventualities, including a global recession, just as any country in the world should be prepared for such a possibility, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
And even if that happens, the government is confident that the country will still continue to record positive growth this year, Tengku Zafrul told reporters after the launch of the Employees Provident Fund's member protection plan, i-Lindung, on Tuesday (July 12).
This is based on preliminary economic data that showed the second quarter of this year had charted strong growth, with the momentum expected to continue into the third quarter, he said.
The statistics so far are showing that Malaysia is on track to achieve its revised targeted growth of 5.3% to 6.3% this year, compared with its previous target of 5.5% to 6.5%, after having factored in a slowdown in the US economy.
"Our fiscal position depends on the growth of our economy. As I mentioned before, besides having already been validated by other international agencies like the World Bank and the International Monetary Fund (IMF), we should be on track to achieve 5.3% to 6.3% [growth]. Therefore, our fiscal space is better than last year. The movements of [certain] commodity prices have also helped our fiscal position," he said.
Just in May, the IMF expressed its optimism that Malaysia's economy would expand by 5.75% this year, driven by pent-up domestic demand and continued strong external demand. In June, the World Bank kept its forecast of Malaysia's economic growth this year at 5.5%, which it expects to be driven mainly by a strong rebound in consumption demand, which it forecast would grow 8.5% this year — its fastest pace since 2008.
The domestic economy expanded by 3.1% last year.
Nevertheless, Tengku Zafrul said the government is aware of the concern and impact of what is happening globally to Malaysia as the country is a small trading economy that would be impacted by rising prices around the world.
"Things are very fluid, so we need to also monitor the growth globally. We will watch this closely but for now — based on the data we have — the projection still remains because Malaysia's economy is diversified. But the growth numbers, I must admit, are uneven in different sectors," he said.
Tengku Zafrul also said the government is looking at ways to save money to ensure that it can channel the money to the right group, and that the government had increased direct cash assistance to RM8 billion — the largest sum in the country’s history — to be channelled under the Bantuan Keluarga Malaysia programme, together with other subsidies.
Just last week, the IMF was reported as saying that the outlook for the global economy had “darkened significantly” since April and its managing director Kristalina Georgieva said she could not rule out a possible global recession next year, given the elevated risks. She also said the fund would downgrade in coming weeks its 2022 forecast of a 3.6% global economic growth for the third time this year, and that IMF economists are still finalising the new numbers.
The IMF is expected to release its updated forecasts for 2022 and 2023 in late July, after slashing its forecast by nearly a full percentage point in April. The global economy expanded by 6.1% in 2021.