Malaysia’s inflation may hit double digits: Finance Minister

Kuala Lumpur – Finance Minister Zafrul Aziz has said Malaysia's inflation may reach around 11 percent if the government does not implement subsidies for essential items like fuel.

The minister told the press that Malaysia's inflation is forecast to be 2.2 percent -3.2 percent. In fact, for the first six months of the year, inflation was around 2.5 percent, and that was largely due to the large size of subsidies that the government introduced.

Malaysia's inflation, as measured by the consumer price index, increased 3.4 percent year-on-year in June, led by costlier food, the Department of Statistics Malaysia said on July 22.

Nonetheless, Tengku Zafrul acknowledged that the current blanket subsidy policy is not sustainable for the country, but it is necessary for economic recovery in the short term.

The government is managing the economy cautiously, and the monetary policy has been further tightened, he said.

In terms of economic growth, Tengku Zafrul said despite the US economic slowdown, the Malaysian government is still optimistic about recording GDP growth in 2022 due in part to low base effect and economic reopening.

However, he cautioned that the challenge lies in 2023, when asked whether Malaysia could avoid a recession given that the country is an open economy with an estimated 120 percent trade-to-GDP ratio.