Kuala lumpur: Malaysia's strong economic fundamentals have positioned the country to effectively face global uncertainties, including ongoing conflicts in West Asia, according to Ambank Group chief economist Firdaos Rosli. He highlighted that, despite these geopolitical tensions exerting pressure on the global economy, Malaysia's economy is not currently showing signs of recession.
According to BERNAMA News Agency, Firdaos emphasized during the forum 'West Asia Crisis: Economic Implications, What is Malaysia's Action?', organized by MINDA-UKM, that the nation is not on the brink of recession this year. As an open economy, Malaysia is exposed to global economic developments, with its trade openness exceeding 130 percent of its gross domestic product (GDP).
Despite fluctuations in the business cycle, the country's economic performance is buoyed by a growth cycle that has remained positive since the 2008 global financial crisis. Firdaos cited data from the Department of Statistics Malaysia to affirm that the overall growth cycle remains robust, notwithstanding periods of slower growth.
Bank Negara Malaysia (BNM) has forecasted an economic growth rate between four and five percent for this year, propelled by resilient domestic demand and sustained investment momentum. This projection is slightly more optimistic than the Ministry of Finance's forecast, announced in October last year.
Firdaos acknowledged that Malaysia's recovery from the COVID-19 pandemic has been challenging, with the business cycle showing more frequent contraction periods. Nevertheless, the annual growth rate continues to demonstrate encouraging figures, suggesting resilience.
On a global scale, Firdaos noted that the International Monetary Fund and the Organisation for Economic Co-operation and Development have warned of potential slower growth and rising price pressures due to increased energy prices. A 10 percent rise in oil prices could potentially reduce global output by 0.1 to 0.2 percentage points, amid significant current energy supply disruptions.
He highlighted the cascading effect from these physical shocks to macroeconomic shocks, influencing inflation and the cost of living. However, Malaysia's status as a net exporter of energy and a net importer of oil provides some economic resilience.
Firdaos pointed out challenges in food security, as Malaysia imports over 50 percent of its food, which could lead to price hikes if global supply chains are disrupted. He also warned of potential export shocks, inflationary pressures, and financial market volatility that could impact Malaysia's economy in the near term, contingent on the duration of the conflict in West Asia.