Source: The Sun Daily
Malaysia is on track to achieving a 4.0% to 4.5% economic growth for
2016, driven by domestic demand that comes primarily from the private
Bank Negara Malaysia (BNM) governor Tan Sri Dr Zeti Akhtar Aziz said
all economic sectors, except for agriculture, are expected to expand,
with the services and manufacturing sectors remaining the key drivers of
“We’ve strengthened our financial system and developed bond market.
Because of that, we’re able to stay within 4% to 5% growth. If we
haven’t done that, then we potentially could have a significant slower
growth of 1% to 2%,” she explained.
Inflation is projected to be lower and more stable at 2.5-3.5% this year, she added.
While global oil prices have rebounded lately, Zeti is of the view
that it won’t pose an inflationary impact on the back of a continued
“Even if oil prices do rise to US$60 per barrel, we anticipate it
won’t exceed that level in two to three years because of structural
conditions prevailing, that there will be excess supply in the next two
years, at least. So it won’t result in inflationary pressure,
particularly in an environment of low growth,” she said.
Meanwhile, Zeti said the 3.25% Overnight Policy Rate is at “appropriate level” at the moment.
“We balance the risk to growth and inflation in making monetary
policy decision ... we can make adjustment should the balance of risk
On the currency front, Zeti said the ringgit will eventually reflect
the underlying economic fundamentals, such as the current account
surplus, continued foreign direct investment and low level of foreign
currency-denominated external debt.
“Apart from that, domestic fundamentals also continue to grow – low
inflation, sound financial system will reinforce the factors, these
eventually what the currency should be reflecting,” she added.
The ringgit appreciated 0.42% to 3.9930 against the greenback as at 5pm yesterday.
However, Zeti cautioned that the ringgit will remain volatile amid uncertainties in global developments.
“That’s why we liberalise many exchange rate administration rules, so
that businesses and households can better manage their foreign exchange
exposure,” she said.