KUALA LUMPUR, Aug 5 — Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz has said that Malaysia may need to recalibrate itself next year, in order to handle a possible economic recession.
Tengku Zafrul said that while he is confident that Malaysia will have positive economic growth at least until the third quarter of this year, the country must be prepared for a slowdown in the global economy.
"We are an open economy, trade to GDP is 120 per cent,” he said in reference to Malaysia’s gross domestic product (GDP) being highly dependent on international trade, during a live interview with CNN last night.
"But the concern will be 2023... we will need to see how the world economy performs then. That’s when I think we really need to relook at some of our policies,” he added.
During the interview, Tengku Zafrul also said that the subsidies in Malaysia — which have been touted as the reason for Malaysia’s relatively low inflation rates — will become more difficult to maintain "in the long term”.
In a circular last month, Bank Negara Malaysia projected the country’s inflation rates to remain between 2.2 to 3.2 per cent this year.
In the United States, CNBC reported that inflation rose to 9.1 per cent in June, while similar figures were seen across Europe.
Last month, the head of the International Monetary Fund (IMF)said the outlook for the global economy had “darkened significantly” since April and she could not rule out a possible global recession next year given the elevated risks.
IMF Managing Director Kristalina Georgieva told Reuters the fund would downgrade in coming weeks its 2022 forecast for 3.6 per cent global economic growth for the third time this year, adding that IMF economists were still finalising the new numbers.
The IMF is expected to release its updated forecast for 2022 and 2023 in late July, after slashing its forecast by nearly a full percentage point in April.
The global economy expanded by 6.1 per cent in 2021.