According to AmBank Group, Malaysia’s inflation is expected to drop to 2.5–3.5% in 2024, mostly as a result of the rationalization of subsidies and the impact of the increase in the services tax.
However, in a research note today, the risk to inflation projections will increase if the scope of rationalization extends to RON95 fuel.
According to AmBank, “the implementation depends on the National Utility database (Padu)’s progress, and the database is expected to be completed in the first quarter of 2024.”
The government projects inflation in 2024 to range from 2.1% to 3.6%, which reflects the steady transition towards a targeted subsidy mechanism that is anticipated to materialize by that year.
The AmBank Group projects inflation to range from 2.5 to 3.0% in 2023.
Meanwhile, Malaysia’s economic growth is predicted to accelerate to 4.5% in 2024 from its projected level of 4.0% in 2023.
It is expected that the feeble export industry will rebound in 2024 as a result of the main economies’ declining inflationary pressures.
“Measures announced in Budget 2024, especially those targeted at increasing consumption, are expected to support economic growth on the domestic front,” it said.
Nevertheless, the bank warned that priorities for consumer spending may shift as a result of the upcoming subsidy rationalization, which will affect fuel and food later in 2024.
Maybank Investment Bank (Maybank IB) has kept its 3.0% inflation estimate for 2024 in place while it waits for further information on Budget 2024 measures, particularly the rationalization of subsidies.
It also reiterated the 2023 headline inflation rate forecast at 2.6 per cent, given the ten months of 2023 headline inflation rate at 2.7% year-on-year.
Hanis Izzatul, is a digital writer who writes about careers, lifestyle, and current trending content to engage Malay readers, informing them about the latest trends happening around. Hanis also are into arts, music, film, and gigs.
