BNM: Economy to grow up to 6.5 pct in 2022
KUALA LUMPUR: Bank Negara Malaysia (BNM) yesterday reiterated that the Malaysian economy will expand between 5.5 per cent and 6.5 per cent this year, underpinned by continued expansion in global demand and higher private sector expenditure, said Governor Tan Sri Nor Shamsiah Mohd Yunus.
In an email interview with Bernama, Nor Shamsiah said Malaysia was well-positioned to gain as global growth and trade bounce back, as observed in 2021.
She pointed out that strong external demand for electrical and electronics (E&E) products and commodities, particularly from the country’s key trade partners including China, the United States (US), and the regional economies, would contribute to further expansion in export-oriented sectors.
“Importantly, the broad-based improvement in overall income, employment conditions, and consumer sentiments would provide a lift to household spending,” she said, also noting that the central bank would be announcing its latest assessment on the economy in March.
The governor said the continuation of major investment projects in key economic sectors, such as in E&E manufacturing and digital investments, would lift growth further.
Nevertheless, the risk to the outlook for 2022 remained, arising from a weaker-thanexpected global growth, worsening supply chain disruptions, and the emergence of severe and vaccine-resistant Covid-19 variants of concern, she added.
Meanwhile, Nor Shamsiah said headline inflation was likely to remain moderate in 2022 as the base effect from fuel inflation dissipates, while core inflation was expected to be modest with the upward pressure contained by the continued slack in the economy and labour market.
“Overall, the inflation outlook continues to be subject to global commodity price developments and risks from prolonged supplyrelated disruptions,” she said.
On another note, Nor Shamsiah said Malaysian banks were taking efforts to integrate environmental, social and governance (ESG) considerations in their governance, business strategy, operations, and risk management.
“This is being reinforced by regulatory measures such as the Climate Change and Principlebased Taxonomy and upcoming guidance on risk management and scenario analysis that has been issued for consultation,” she said, in response to a question on flood events in Malaysia that further solidified the need for
ESG adaptation.
She explained that the recent floods were a powerful demonstration and reminder on the need to take the sustainability agenda seriously.
“Some banks have started analysing exposures in their lending and investment portfolios, and then engaging customers where there are ESG concerns. We are also seeing more and more banks supporting their customers transition to more sustainable practices, including by offering solutions and advice.” Nor Shamsiah said these were just baby steps, and there was still a lot more work to be done.
“But in this area, we are confident that the banking industry is moving in the right direction and that momentum will continue to pick up,” she added.
Nor Shamsiah said the financial sector has stepped up efforts to provide various forms of assistance to those affected by the floods, not just to provide repayment assistance but also to waive fees and charges to replace lost or damaged bank documents.
Any such assistance would entail a cost, she noted, but this would be manageable as floodrelated exposures were expected to be moderate and the banking industry has also been gradually building up their provisioning levels since 2020 to provide buffers for further adverse impact from the pandemic.
Taken together, the central bank did not expect a sudden surge in credit costs and this would contain any significant impact on banks’ earnings.
“On this end, I also want to emphasise that banks are able to provide this assistance while managing their bottom lines and depositors’ interest, only because of decades of efforts to strengthen governance and risk management in the financial sector,” said Nor Shamsiah.
Importantly, the broad-based improvement in overall income, employment conditions, and consumer sentiments would provide a lift to household spending.
Tan Sri Nor Shamsiah Mohd Yunus