MALAYSIA’s inflation rate is expected to be at -1% in 2020 with a possible rebound to 2% next year as price pressure on the demand side should remain subdued, given the weak economic momentum this year, said RHB Investment Bank Bhd.
“For next year, we see support from vaccine deployment in mid-2021, which would lead to better demand and commodity growth,” it said in a note yesterday.
Meanwhile, the Department of Statistics Malaysia (DoSM) announced that Malaysia’s, measured by the Consumer Price Index (CPI) slipped 1.4% year-on-tear (yoy) to 120.1 in September against last year’s 121.8, but remained unchanged when compared to August 2020.
The decline was attributed to the fall in transport (-9.9%), housing, water, electricity, gas and other fuels (-3%) as well as clothing and footwear (-0.6%), which contributed 41.6% to the overall weighting.
The bank also noted that the domestic economy appears to be dimming as the country returns to stricter social distancing measures.
“We see the possibility of a 25-basis point reduction in the overnight policy rate (OPR) by Bank Negara Malaysia (BNM) on Nov 3, in reaction to the two-week conditional movement control order (CMCO) imposed recently, which we estimate to shave a further 0.18% from the gross domestic product (GDP) for 2020),” it said.
“We reiterate our GDP forecast of -4.4% this year,” the research house added. – Oct 22, 2020
