MoF Focusing On Structural Reforms To Enhance Economic Resilience

KUALA LUMPUR, Sept 21 (Bernama) -- Malaysian Finance Ministry (MoF) will continue to focus on important structural reforms to strengthen the nation’s economic resilience while curbing inflation amidst the current uncertain global environment. Finance Minister Tengku Zafrul Tengku Abdul Aziz said as Malaysia practices an open economy, the government will continue to be proactive to prepare the country to face these challenges. “Since the pandemic began, the government, specifically the MoF, has become aware of the importance of structural reforms to ensure sustainable development. “As such, the government had taken several initiatives such as improving the social security network, addressing the youth unemployment issue, and raising the minimum wage,” he said in a statement today. However, he stressed that it will some time to address structural issues which have been a blight for decades. The finance minister added that the high expenditure to protect lives and health, as well as to support businesses during the pandemic had highlighted the importance of strengthening the nation’s fiscal position and overcoming the structural issues. Tengku Zafrul also said that globally, the economic challenges are expected to increase from the fourth quarter of 2022 and going into 2023 due to the geopolitical tension between the United States and China, the war in Ukraine, and the zero-COVID-19 policy in China which has affected the global supply chain. Due to the country’s conservative zero-COVID-19 policy, the Asian Development Bank had also reduced China’s GDP growth projection to 3.3 per cent for 2022 -- the lowest gross domestic product (GDP) growth projection compared to developing Asian nations for the first time in over 30 years. The climate change is also expected to disrupt the productivity of major food producers such as India, thus contributing to increased commodity and food prices. “These factors will continue to put pressure on inflation rates and food security around the world, including Malaysia. Accordingly, the International Monetary Fund (IMF) has also revised the global growth forecast for 2023 downward, from 3.8 per cent in January 2022 to 2.9 per cent in July 2022. “The IMF had also increased its inflation rate projection for developing nations by 0.8 percentage points to 9.5 per cent, and had also raised the projected inflation rate for developed nations by 0.9 percentage points to 6.6 per cent,” he said. Altogether, these factors will have an impact on Malaysia’s projected GDP growth for 2023, which is expected to be lower than 2022. Nevertheless, despite the challenging external factors, the policies implemented by the government have succeeded in helping the Malaysian economy to recover, especially sectors that were severely affected during the COVID-19 pandemic, such as tourism, retail and aviation, he said. He added that the expansionary fiscal policy under Budget 2022 as well as the accomodative monetary policy had also contributed to the country’s economic recovery. “As such, Malaysia’s GDP is expected to chart positive growth of between 5.3 and 6.3 per cent for 2022,” he said. Meanwhile, Tengku Zafrul said that Budget 2023 will continue to prioritise the structural reform agenda to maintain the post-pandemic economic recovery momentum, ensure the well-being of the people and strengthen the resilience of the people and businesses against any future shocks, especially the serious and ongoing geopolitical uncertainties and climate change challenges. -- BERNAMA