GEORGE TOWN, Feb 1 — The economic situation in the country is looking up this year with a low inflation rate of two per cent, Finance Minister Lim Guan Eng said today.
He said the projection for the inflation rate this year will vary as it is dependent on global uncertainties but domestically, the country’s economy is expected to bounce back.
Lim said the country’s exports last year exceeded RM1 trillion.
“This year, we expect to see more than RM1 trillion in exports,” he said.
This meant the country’s domestic economy is stable and expected to get better, he added.
“If the global uncertainties were to escalate, the inflation rate may go up to 2 per cent but if the global uncertainties can be resolved, I think it can be lower than that, we are looking at 1.6 per cent,” he said in a press conference after announcing his joint Chinese New Year open house event with the Penang Chinese Chamber of Commerce here.
He said even with a maximum inflation rate of 2 per cent, that figure is still comparatively low.
“If Trump settles with China, we will see the stock market flying but if the trade war escalates, it is a different story, we are all dependent on global uncertainties,” he said.
The Bagan MP was referring to the ongoing trade tension between United States and China.
“The inflation rate last year was 1 per cent, the lowest in nine years,” he added.
He said this showed that by abolishing the Goods and Services Tax (GST) and replacing it with Sales and Services Tax (SST), price increases were successfully controlled.
He compared the low 1 per cent inflation rate to the 3.7 per cent inflation rate in 2017 when GST was in force.
“Last year, even though the GST was abolished in June, only for half year, it can reduce the inflation rate to 1 per cent,” he said.
He admitted that there were also price increases under the SST but it was not as bad as the GST.
“There is still room for us to improve the SST, especially for essential items that saw price increase of more than 100 per cent, we admit this, so we are taking steps to ensure that this is under control,” he said.