Page 162 - Malaysia Baharu 2018
P. 162
manageable external debt exposure. GDP growth. However, better private
These strengths in the external consumption growth following increased
position, along with a flexible household spending due to the
exchange rate and a well-developed zerorisation of the GST rate supported
financial system, effectively mitigated domestic growth during the period.
the impact of volatile shifts in capital On balance, the Malaysian economy
flows on domestic financial markets. was expected to remain on a steady
Appropriate foreign exchange growth path. Throughout 2018,
intervention and the implementation underlying inflation was expected to
of financial market measures moderate following expectations of
during this period of volatility also smaller pass-through from external
underscored the importance of and domestic cost factors, and
6 | MALAYSIAN ECONOMY pragmatic, timely policy responses the absence of excessive demand
in managing risks and supporting pressures. Subsequent to the OPR
growth. increase in January, the OPR was
maintained at the prevailing level for
Economic and Monetary the remainder of the year. The degree
Management in 2018 of monetary accommodativeness was
The Monetary Policy Committee (MPC) assessed to be consistent with the
normalised the degree of monetary intended policy stance of ensuring that
accommodation at the January 2018 the domestic economy continued on a
MPC meeting and raised the Overnight steady growth path with price stability.
Policy Rate (OPR) by 25 basis points
to 3.25%. In the MPC’s assessment, Throughout the year, domestic
the economic conditions that had financial markets experienced shifts
called for the previous OPR reduction in non-resident portfolio flows,
in July 2016 had vastly improved. largely reflecting changes in investor
The OPR adjustment, however, sentiments and risk appetite. In the
did not constitute a tightening of first quarter, global financial markets
monetary conditions, as the overall continued their strong momentum
stance of monetary policy remained from 2017 and investor sentiments
supportive of economic growth. remained buoyed by the positive
The normalisation of the degree of economic outlook in emerging market
monetary accommodation contributed economies. As a result, the demand
towards preserving the sustainability for ringgit investment assets provided
of growth, while ensuring ample support to the ringgit exchange
policy space in the event of shocks to rate, as well as domestic bond and
the economy in the future. The MPC equity prices. However, this trend
also recognised the need to prevent reversed from the second quarter
the build-up of risks that could arise onwards as global and domestic
from interest rates being too low for a policy uncertainties weighed down on
prolonged period of time even as the investor sentiments. For the year as a
risks of financial imbalances remained whole, the ringgit depreciated by 1.8%
contained. to end the year at RM4.1385 against
the US dollar and remained as one
By mid-year, however, the prospects of the better performing currencies in
to both the global and domestic the region. The benchmark Malaysian
growth outlook shifted. Even though Government Securities (MGS) yield
global economic expansion continued, curve shifted upwards, reflecting an
there was increasing divergence increase in bond yields across all
across economies and signs of maturities.
moderating global growth momentum.
Domestically,unanticipated commodity The domestic financial markets performed
supply-side shocks and lower relatively well and continued to intermediate
public sector spending led to slower shifts in capital flows in a stable and
160
These strengths in the external consumption growth following increased
position, along with a flexible household spending due to the
exchange rate and a well-developed zerorisation of the GST rate supported
financial system, effectively mitigated domestic growth during the period.
the impact of volatile shifts in capital On balance, the Malaysian economy
flows on domestic financial markets. was expected to remain on a steady
Appropriate foreign exchange growth path. Throughout 2018,
intervention and the implementation underlying inflation was expected to
of financial market measures moderate following expectations of
during this period of volatility also smaller pass-through from external
underscored the importance of and domestic cost factors, and
6 | MALAYSIAN ECONOMY pragmatic, timely policy responses the absence of excessive demand
in managing risks and supporting pressures. Subsequent to the OPR
growth. increase in January, the OPR was
maintained at the prevailing level for
Economic and Monetary the remainder of the year. The degree
Management in 2018 of monetary accommodativeness was
The Monetary Policy Committee (MPC) assessed to be consistent with the
normalised the degree of monetary intended policy stance of ensuring that
accommodation at the January 2018 the domestic economy continued on a
MPC meeting and raised the Overnight steady growth path with price stability.
Policy Rate (OPR) by 25 basis points
to 3.25%. In the MPC’s assessment, Throughout the year, domestic
the economic conditions that had financial markets experienced shifts
called for the previous OPR reduction in non-resident portfolio flows,
in July 2016 had vastly improved. largely reflecting changes in investor
The OPR adjustment, however, sentiments and risk appetite. In the
did not constitute a tightening of first quarter, global financial markets
monetary conditions, as the overall continued their strong momentum
stance of monetary policy remained from 2017 and investor sentiments
supportive of economic growth. remained buoyed by the positive
The normalisation of the degree of economic outlook in emerging market
monetary accommodation contributed economies. As a result, the demand
towards preserving the sustainability for ringgit investment assets provided
of growth, while ensuring ample support to the ringgit exchange
policy space in the event of shocks to rate, as well as domestic bond and
the economy in the future. The MPC equity prices. However, this trend
also recognised the need to prevent reversed from the second quarter
the build-up of risks that could arise onwards as global and domestic
from interest rates being too low for a policy uncertainties weighed down on
prolonged period of time even as the investor sentiments. For the year as a
risks of financial imbalances remained whole, the ringgit depreciated by 1.8%
contained. to end the year at RM4.1385 against
the US dollar and remained as one
By mid-year, however, the prospects of the better performing currencies in
to both the global and domestic the region. The benchmark Malaysian
growth outlook shifted. Even though Government Securities (MGS) yield
global economic expansion continued, curve shifted upwards, reflecting an
there was increasing divergence increase in bond yields across all
across economies and signs of maturities.
moderating global growth momentum.
Domestically,unanticipated commodity The domestic financial markets performed
supply-side shocks and lower relatively well and continued to intermediate
public sector spending led to slower shifts in capital flows in a stable and
160
