Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour
KUALA LUMPUR: Bank Negara projects the Malaysian economy to grow by 4.5% to 5.5% this year driven by sustained domestic demand anchored on private consumption, private sector investments as well as the continued progress of public sector infrastructure projects and the adjustments to civil service wages.
Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour said in a media briefing for the release of the central bank’s annual report for 2024 that while exports growth could moderate in the face of more severe trade restrictions and geopolitical conflicts, household spending and the robust expansion in private sector investments should support growth.
Bank Negara projects global growth to expand by 2.8% and 3.3% on the back of positive labour market conditions, moderating inflation and easing monetary policy and, the global technology upcycle.
The central bank projects headline inflation for this year to average between 2% and 3.5%, with core inflation, stripped of energy and food items, to average between 1.5% and 2.5%.
Abdul Rasheed said inflation would trend higher but remain manageable on the implementation of the RON95 subsidy rationalisation, expansion of the sales and service tax to cover more items and services and, the revision of the minimum monthly wage to RM1,700 from RM1,500.
Abdul Rasheed pointed out that monetary policy would continue to focus on maintaining price stability for sustainable economic growth.
“Domestic monetary and financial conditions will remain supportive of financing needs amid sustained economic expansion. Credit demand will be driven by positive prospects of domestic growth and income,” he said, adding that despite the potential risks from external developments, the country’s financial markets would remain resilient and well-positioned to preserve orderly market conditions.
Bank Negara has kept the overnight policy rate, the key interest rate, at 3% since May 2023.
The current account surplus would range between 1.5% and 2.5% of GDP this year on higher goods surplus and lower services deficit. The factors supporting the current account balance this year would be the continued technology upcycle driving demand for electrical and electronic exports, improving inbound tourism and travel receipts and higher inward income repatriation.
The economy grew by 5.1% last year driven by a 5.1% growth in private consumption, 12% rise in total investments and the return to positive growth in exports, which increased 8.5%. Headline inflation in 2024 moderated to 1.8% from 2.5% in 2023.
