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World Bank: Malaysia inflation to rise by 1.5%-2% next year
KUALA LUMPUR: Malaysia’s headline inflation is expected to increase modestly in 2020, with consumer price inflation to average higher in the range of 1.5%-2% next year compared with 0.7% projected for 2019, said the World Bank Group.
In its 21st edition of the Malaysia Economic Monitor “Making Ends Meet” report launched yesterday, it said the higher projection was mainly reflecting the lapse in the effects of consumption tax policy changes in 2018.
“The reintroduction of the float pricing mechanism for RON95 petrol and diesel in January 2020 is expected to result in modest increases in transportation costs at the prevailing global oil prices, ” it said.
The report said various downside risks in the global economy could have spillover effects on Malaysia’s economy, such as further escalation of the current US-China trade tensions could contribute to growing uncertainty and dampen investment activity.
“Moreover, deepening on the slowdown in the major economies as well as sharper-than-expected deceleration in China could lead to deterioration in export and growth prospects. An unexpected drop in commodity prices could affect growth and lead to further fiscal pressures on Malaysia, ” it said.
On the domestic economic front, the World Bank said risks to growth would primarily emanate from factors related to prolonged uncertainty among investors and delayed recovery in commodity-related sectors.
“Investment growth has been subdued over the recent quarters, weighed down by lower capital spending. Indicators of business sentiment suggest the level of confidence in the economy remains low.
“While uncertainty regarding the global economic outlook would have an impact on Malaysia’s economy, similar uncertainty regarding the domestic economy and political developments could exacerbate cautious sentiment, further dampening private investment, ” it said.
The report noted the elevated government debt and liabilities, the continuing decline in government revenue, coupled with increased locked-in expenditures, would constrain fiscal policy space moving forward. — Bernama
Source: https://www.thestar.com.my/business/business-news/2019/12/10/world-bank-msia-inflation-to-rise-by-15-2-next-year#h6IwBHV5EFw6E1zz.99