RHB Research has predicted an uptick in Malaysia's headline inflation to 3.3% in 2024, against an estimate of 2.6% in 2023. This is amid a rise in Asean consumer prices. The research house said the inflationary pressures domestically stem from policy changes, costlier commodity and food, and heightened demand-side pressure.
Meanwhile, RHB Research said it is seeing persistent signals for Asean consumer prices to accelerate higher in 1Q2024. It attributed the reasons for the inflation heat in the Asean region to stronger demand-pull drivers, adverse weather and geopolitical conditions, as well as China’s economic recovery.
Source: https://hmarkets.com
The research house is relatively sanguine regarding global economic growth in 2024, stating that catalysts for its view included rate normalisation which may materialise in 2H2024, dissipation of inflation risks over the same period towards key central banks’ objectives, and China’s potential economic recovery in 2024.
It looks for an acceleration in global growth this year, led by further recovery in the US and China economies. US and China GDP (gross domestic product) growth to come above consensus at 2.2% and 5.0%, respectively.
According to RHB Research, the higher commodity prices are underpinned by China’s economic recovery, which surpassed market estimates when its GDP growth for 3Q2023 rose 1.3% quarter-on-quarter on a seasonally adjusted growth basis, translating to a 4.9% year-on-year growth over the same period.
Malaysia, Vietnam, Singapore, and Thailand are likely to experience improved trade and tourism opportunities, particularly in the electrical and electronics (E&E) trade, due to China's economic momentum recovering in 2024.
Food prices will likely point higher, exacerbated by India’s rice export ban and El Nino weather conditions, which threaten favourable harvesting conditions.
In addition, depreciation of ringgit elevates cost of food imports of about RM70-75 billion a year. The Government requires a multi-pronged strategy to dampen inflation – from monetary to fiscal policies that could help cost of living to be bearable!
Reference:
RHB forecasts 3.3% inflation for Malaysia in 2024 amid persistent price surge in Asean,
Lee Ming Hui, The Edge Malaysia, 18 Jan 2024
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