Page 123 - Malaysia 2016
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2016 123
economy, Malaysia is not insulated 4.5% and 5.5% in 2015, on the premise that
from the heightened uncertainties domestic demand would be the anchor
and risks from external developments. to growth amid weak external demand.
However, Malaysia has demonstrated Headline inflation was forecasted to
its ability to withstand external shocks range between 2.0% to 3.0% as lower
through economic flexibility and the global commodity prices and the lower
safeguards provided by the financial global inflation were expected to offset
buffers and robust policy frameworks the increase in domestic cost factors
that have been built over the course and the effects from a weaker ringgit
of many years. Malaysia’s deep and exchange rate. Underlying inflation was
diversified domestic financial market assessed to remain relatively moderate
were able to accommodate the large amid slower growth of domestic
volume of capital flows, while domestic demand. This outlook, however, was
institutional investors provided sustained subject to risks arising from a series of
demand for domestic financial assets developments during the year. These
as foreign investors rebalanced their included the impact of the uncertain
exposures. The Bank’s monetary outlook for commodity prices on the
operations and the use of several policy domestic oil and gas sector and the
instruments also ensured the availability potential negative spillover to investment
of sufficient liquidity to support the activity, exports, the overall balance
orderly functioning of the money and of payments and the Government’s
exchange rate markets. The flexibility fiscal position. Another risk was related
of the exchange rate has also allowed to the outcome of the GST introduction
the ringgit to adjust to the changes in in April 2015, especially in terms of the
external conditions. At the same time, pricing behaviour of firms and possible
the international reserves has acted as profiteering. Heightened uncertainties
a buffer to prevent excessive volatility in the global economy and financial
in the ringgit exchange rate. As such, markets, and to a certain extent,
despite considerable volatility in capital domestic factors during the second
flows, the impact on domestic financial half of the year had also significantly
markets was not significant, allowing for affected domestic financial markets
uninterrupted financial intermediation and the ringgit exchange rate.
to support the economy.
Notwithstanding these developments,
Economic and Monetary Management the Malaysian economy proved to be
in 2015 resilient and was sustained by a well-
diversified economy. The deep financial
The Monetary Policy Committee (MPC) markets and well-capitalised financial
maintained the Overnight Policy Rate institutions were able to withstand the
(OPR) at 3.25% in 2015, with the focus large and volatile capital flows and
of ensuring that monetary conditions this enabled financial intermediation
supported the sustainable growth of the to continue uninterrupted. Overall
Malaysian economy while maintaining domestic liquidity remained sufficient
price stability. Against the backdrop of and financial institutions continued to
a challenging external environment that operate with strong capital and liquidity
affected the outlook for the Malaysian buffers. Against this backdrop, the MPC
economy, the monetary policy stance assessed that the stance of monetary
remained accommodative and policy was appropriate and consistent
supportive of economic activity. The MPC with the achievement of sustainable
also maintained its vigilance against risks economic growth and price stability.
related to financial imbalances. Monetary policy, together with earlier
macro- and micro-prudential measures
The Malaysian economy was projected also continued to play a role in ensuring
to grow at a steady pace of between that the growth of household debt was
economy, Malaysia is not insulated 4.5% and 5.5% in 2015, on the premise that
from the heightened uncertainties domestic demand would be the anchor
and risks from external developments. to growth amid weak external demand.
However, Malaysia has demonstrated Headline inflation was forecasted to
its ability to withstand external shocks range between 2.0% to 3.0% as lower
through economic flexibility and the global commodity prices and the lower
safeguards provided by the financial global inflation were expected to offset
buffers and robust policy frameworks the increase in domestic cost factors
that have been built over the course and the effects from a weaker ringgit
of many years. Malaysia’s deep and exchange rate. Underlying inflation was
diversified domestic financial market assessed to remain relatively moderate
were able to accommodate the large amid slower growth of domestic
volume of capital flows, while domestic demand. This outlook, however, was
institutional investors provided sustained subject to risks arising from a series of
demand for domestic financial assets developments during the year. These
as foreign investors rebalanced their included the impact of the uncertain
exposures. The Bank’s monetary outlook for commodity prices on the
operations and the use of several policy domestic oil and gas sector and the
instruments also ensured the availability potential negative spillover to investment
of sufficient liquidity to support the activity, exports, the overall balance
orderly functioning of the money and of payments and the Government’s
exchange rate markets. The flexibility fiscal position. Another risk was related
of the exchange rate has also allowed to the outcome of the GST introduction
the ringgit to adjust to the changes in in April 2015, especially in terms of the
external conditions. At the same time, pricing behaviour of firms and possible
the international reserves has acted as profiteering. Heightened uncertainties
a buffer to prevent excessive volatility in the global economy and financial
in the ringgit exchange rate. As such, markets, and to a certain extent,
despite considerable volatility in capital domestic factors during the second
flows, the impact on domestic financial half of the year had also significantly
markets was not significant, allowing for affected domestic financial markets
uninterrupted financial intermediation and the ringgit exchange rate.
to support the economy.
Notwithstanding these developments,
Economic and Monetary Management the Malaysian economy proved to be
in 2015 resilient and was sustained by a well-
diversified economy. The deep financial
The Monetary Policy Committee (MPC) markets and well-capitalised financial
maintained the Overnight Policy Rate institutions were able to withstand the
(OPR) at 3.25% in 2015, with the focus large and volatile capital flows and
of ensuring that monetary conditions this enabled financial intermediation
supported the sustainable growth of the to continue uninterrupted. Overall
Malaysian economy while maintaining domestic liquidity remained sufficient
price stability. Against the backdrop of and financial institutions continued to
a challenging external environment that operate with strong capital and liquidity
affected the outlook for the Malaysian buffers. Against this backdrop, the MPC
economy, the monetary policy stance assessed that the stance of monetary
remained accommodative and policy was appropriate and consistent
supportive of economic activity. The MPC with the achievement of sustainable
also maintained its vigilance against risks economic growth and price stability.
related to financial imbalances. Monetary policy, together with earlier
macro- and micro-prudential measures
The Malaysian economy was projected also continued to play a role in ensuring
to grow at a steady pace of between that the growth of household debt was
