Malaysia won't face stagflation, must reform for recovery - BNM

Malaysia will not face stagflation despite rising global inflation, with 2022 GDP growth expected to range between 5.5 and 6.5 percent.

However, Malaysia must embrace structural reforms to secure a more durable post-pandemic economic recovery, said Bank Negara Malaysia (BNM) governor Nor Shamsiah Mohd Yunus (above).

She said the central bank remained firm on next year's GDP projection, supported by gradual easing of Covid containment measures, which further support the resumption of economic activities.

"The growth projection would also premise on several factors, namely continued recovery in the labour market as economic activity improves, a pickup in production and construction activities driven by selected key projects, continued policy support, and the growth in exports, and underpinned by strong external demand," she said.

She was speaking at a joint press conference today by BNM and the Department of Statistics Malaysia (DOSM) on Malaysia's third-quarter 2021 GDP performance.

She said the central bank does not see any indications of a broad-based price increase or excessive price pressures as price pressures are to remain moderate in 2022 driven by spare capacity in the economy.

"Even if some businesses choose to adjust their prices and offer more competitive wages to attract workers as people begin to spend again, there is still room for improvement in both growth and employment.

"I understand that demand-driven price pressures are a source of concern, but there are many factors that can affect the inflation outlook, both domestically and internationally.

"This includes global commodity price developments as well as the risk of a prolonged supply disruption. We will continue to monitor this closely.

"I have previously stated that the stance of monetary policy will continue to be determined by incoming information and the implications for the overall outlook of inflation and domestic growth,” she added.

- Bernama