Socio-Economic Research Centre economist and executive director Lee Heng Guie says inflation is expected to rise higher to 2.8-3.5% in 2024 from an estimated 2.5% in 2023.
PETALING JAYA: The government’s intention to review price controls and subsidies in 2024 will affect the outlook for inflation and demand conditions in Malaysia as the country moves from transition and policy setting to implement promised reforms and policies.
Socio-Economic Research Centre economist and executive director Lee Heng Guie said inflation is expected to rise higher to 2.8-3.5% in 2024 from an estimated 2.5% in 2023.
“Risks come from fluctuation in exchange rates and supply-related factors, such as global commodity prices, geopolitical uncertainties and climatic conditions,” he said at the CEO Series 2023: Economy and Business Forum organised by Rehda Institute here today.
Economy minister Rafizi Ramli had confirmed recently that the government will roll-out the targeted RON95 subsidy programme in the second half of 2024 to optimise its resources.
He said a country where those in the top-20% income group are receiving 53% of blanket fuel subsidies is not a sustainable model.
“Given that our public finances ran a fiscal deficit of more than 5.0% for three consecutive years, we must find new avenues to mobilise our resources and reduce wastages within the system,” Rafizi had said.
Lee, in his presentation, cited the government’s limited fiscal space as one of the hindrances for growth.
“We know what went wrong and what needs to change. We have to endure the painful transition costs and adjustments when making radical reforms and overhauling the system,” he said.
As for growth, Lee said Malaysia’s economy expanded 3.9% in the first nine months of 2023 and foresees the last quarter to hover around 4%, supported by tourism.
“Next year, I am looking at an economic growth of about 4.5%, which is within the government’s forecast range.
“So, all sectors will continue to grow next year. The one that will be driving it is the services sector, followed by a recovery in the manufacturing sector,” he said.
Lee said the services sector will be strong with a 5.3% growth, supported by the retailing industry, and depending on a revival in the tourism segment.
Source: freemalaysiatoday.com
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