Amidst the gloomy predictions Malaysia’s economy seems to be facing, Malaysia’s central bank Governor Zeti Akhtar Aziz is bringing in a little bit of sunshine back as she claims Malaysia’s economy is on track to expand to 5 per cent this year as domestic demand holds up and exports recover.
This is still a cut from its original forecast where it was predicted to expand as much as 6 per cent though, but Zeti is focusing mostly on growth rather than inflation, because global growth would remain subdued and inflation was stable.
While the government’s subsidy rationalisation would contribute in some part to higher prices, productivity gains could help lower costs, Zeti said. The government’s financial position would improve from revenue collection, which had become more efficient, and the implementation of a value-added tax would also boost the revenue base.
But if you’re hoping that this little ray of light would help strengthen the Ringgit for any future travel plans, you’ve got to wait it out a bit longer. Zeti has no plans to venture to internationalise the currency in this kind of environment even though the ringgit has declined to 3.2606 per dollar, the worst performance among Asia’s 11 most-traded currencies.
But Zeti assures there’s nothing to worry about. If you compare Malaysia’s currency with other currencies, it’s been relatively stable. As long as the underlying fundamentals remain strong, then over time it should be an appreciating trend.
Such optimism is truly noteworthy!