Inflation in Malaysia can get up to 3% in 2013 of 1.7 percent in 2012 as subsidy rationalisation after the general election and there may be spillover effects can resume of higher commodity prices, according to a top CIMB Investment Bank Bhd Economist.
"I think inflation will be trending higher next year," said Lee Heng Guie, CIMB Investment Bank regional head of economics research.
He estimated inflation of 2.5 percent to 3 percent for 2013 against the Ministry of Finance of 2 percent to 3 percent during the 76th Financial Advisory Series held by CIMB preferred.
According to him, potential risk of food inflation stemmed from the possible El Nino dry spell that would spillover to raw materials.
Beside that, fuel subsidy budget reducing 25.2 billion wais ringgit (US $ 8.26 billion) this year to 20 billion ringgit in 2013 in the most recent budget, he said.
In the budget for the next year, the Government had also proposed to sugar subsidies by 20 sen per kg to 34 sen.
He expects inflation this year to 1.7 percent from 2 percent-2.5 percent forecast by the Ministry of finance.
Index of consumer prices for the period of January to September showed an increase of 1.8 percent to 104.7 this year compared with the same period last year.
On the overnight interest rate policy expected to Bank Negara, Malaysia S central bank, to maintain at 3 percent for the first half of 2013.
"With growth risk now take center stage against a background of cautious and bumpy global conditions, we expect the central bank to maintain its fairly accommodative monetary policy to support the robust domestic demand," he said.
In addition to food inflation, the purchasing power of the people with low and average income would dampen, Lee identified four other factors that would affect the economic prospects of Malaysia.
The main concerns include the euro zone debt crisis, the Economic Outlook in the United States, the growth in China and capital flow volatility.
He said that the third round of the quantitative easing "unlimited" to improve the economic situation in the United States could be.
"You can see new flow of liquidity coming to the banks of the emerging market," he said, adding that investors would seek higher yields elsewhere the languishing economies in the United States and Europe.
Emerging markets, including Malaysia had to be prepared for the possibility of the outflow of capital later, he said.
Bank Negara Governor Zeti Akhtar Aziz said recently that Malaysia Dr, the increases of the inflow of capital and reversals of the country's financial system had a degree of maturity.
* U.S. $ 1 = 3.05 ringgit
Post a Comment
Post a Comment