Economy likely to grow by 4% to 5% this year
PETALING JAYA: The country’s growth will be driven mainly by resilient domestic expenditure, with additional support emanating from the expected recovery in exports.

According to the “Economic and Monetary Review 2023” report, sustained employment and wage increases will continue to bolster household spending.

Tourist arrivals and expenditures are anticipated to see further improvement.

It noted that investment activity will be fuelled by the continued progress of multi-year projects in both the private and public sectors, with some support from the implementation of catalytic initiatives under the national master plans.

Nevertheless, domestic growth remains subject to downside risks from both external and domestic factors.

Malaysia’s strong economic fundamentals, resilient economic growth and stable external sector indicate that the ringgit is undervalued at its current level.

The recent movement of the ringgit is primarily influenced by short-term factors, such as aggressive monetary policy tightening by the US Federal Reserve and shifting financial market expectations, according to the report.

Bank Negara is committed to playing its part to preserve confidence in the ringgit.

The central bank has collaborated with the government to increase inflows that would allow the ringgit to appropriately reflect the fundamentals and prospects of the Malaysian economy.

Government-linked companies (GLCs) and government-linked investment companies (GLICs) have been encouraged to consistently repatriate foreign investment income and convert it to ringgit.

Bank Negara has also stepped up engagements with resident exporters and monitors their conversion of export proceeds to ringgit, because conversion behaviour has an impact on the exchange rate.

These actions are contributing to greater and sustained inflows, lending support to a firmer ringgit.

The central bank also continues to advocate greater use of local currency when settling export or import payments either via the Local Currency Settlement Framework or normal correspondent banking channels to reduce US dollar dependence.

Bank Negara has also intensified engagements with various stakeholders – including business owners, financial market analysts and politicians – to further deepen its understanding of challenges faced in this environment, as well as to share Bank Negara’s perspectives and responses to manage the pressures on the ringgit.

Beyond these short-term measures, the government is pursuing structural reforms that will ensure fiscal sustainability, new growth areas and thus increased growth potential, as well as enhanced labour productivity and competitiveness.

The execution of the reforms should bring in more investment flows into Malaysia, and thus provide more enduring support for the ringgit in the long run.
Economy,Ringgit,EconomicGrowth,DomesticDemand,StructuralReforms,DomesticExpenditure,ExportRecovery,TouristExpenditure
The country’s growth will be driven mainly by resilient domestic expenditure, with additional support emanating from the expected recovery in exports.