KUALA LUMPUR: Malaysia's central bank on Wednesday (Mar 30) trimmed its 2022 economic growth forecast to between 5.3 per cent-6.3 per cent, with its governor saying the country's continued recovery will be slightly offset by the economic expected impact of the Ukraine conflict.
Bank Negara Malaysia (BNM) had previously projected the economy would grow between 5.5 per cent to 6.5 per cent in 2022, as borders and businesses reopen following the lifting of coronavirus restrictions.
Malaysia's exports are expected to rise 10.9 per cent this year on higher global demand and stronger commodity prices, despite supply chain disruptions and a spike in global oil prices stemming from the war in Ukraine, Governor Nor Shamsiah Mohamad Yunus said.
"However, we are operating in a highly dynamic environment. As such, risks are tilted to the downside, many stemming from both COVID-19 and geopolitical developments," she told a news conference following the release of BNM's annual report.
Malaysia posted 3.1per cent economic growth in 2021, rebounding after recording its worst performance in more than two decades in the previous year.
Headline inflation is expected to average between 2.2 per cent to 3.2 per cent in 2022, with spare capacity in Malaysia's economy and the labour market cushioning the impact of rising prices globally, Nor Shamsiah said.
Last month, the central bank left its key interest rate unchanged at a record low of 1.75 per cent to support a continued recovery.
Nor Shamsiah, however, said BNM was "mindful of the consequences of keeping interest rates low for an extended period of time, which could lead to an unhealthy build-up in financial imbalances."
She said that any monetary policy adjustment would be gradual and measured, determined by new data amid uncertainty.
The governor also stressed that its policy measures would need to be supported by long-term reforms to increase income in order to manage inflation and higher living costs in the future.
Malaysian industries last week protested against a government plan to raise a national minimum wage, warning that companies could lose their competitive edge as well as suffer higher costs and a hit to their business recovery.