Tengku Zafrul: Pent-up demand will drive Malaysia's economy to grow faster

·2-min read
Malay Mail
Malay Mail

KUALA LUMPUR, Aug 14 — Malaysia’s economy will grow even faster this quarter compared to the second quarter of the year, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said in an interview with Bloomberg yesterday.

He said that the accelerated growth would be a result of private consumption as economic activities pick up.

“People are underestimating the strength of the pent-up demand.

“Restaurants are packed, traffic jams have returned, the unemployment rate has fallen to below 4 per cent and the first-half tax collections have been way above our estimate,” he told the international business news wire.

Last Friday, chief statistician Datuk Seri Mohd Uzir Mahidi announced that Malaysia’s gross domestic product (GDP) had grown by 8.9 per cent from April to June, compared to the first quarter of the year.

Bloomberg reported it to be the fastest rate at which the Malaysian economy has grown since the second quarter of 2021.

Tengku Zafrul also acknowledged that the ringgit has depreciated against the US dollar, but reportedly said that it “isn’t the only one that has weakened, though some people are spinning it that way”.

“Apart from Bank Negara Malaysia (BNM) ensuring the currency fluctuations are not severe, it comes down to the economy’s fundamentals. We need to strengthen them and the ringgit will reflect that. The GDP data validates the recovery,” he was quoted as saying.

Addressing Malaysia’s need to finance its high amounts of government subsidies, Tengku Zafrul reportedly said: “The easiest way is to borrow more”.

He reportedly added that there is leeway for Malaysia to do so as the country’s debt-to-GDP ratio is 60.4 per cent, which is still below the statutory debt ceiling cap of 65 per cent.

“But we are committed to a fiscal deficit target at 6 per cent of GDP. Pre-pandemic, our deficit was at 3.5 per cent. We have to get there eventually,” he was quoted as saying.

Tengku Zafrul also reiterated remarks he made to CNN on August 5, saying that disruptions in the economy of China — Malaysia’s largest trading partner — and its rising tensions with the US are concerns for Malaysia.

“We are hoping that the inflation concerns in the US ease and that China addresses its conservative Covid measures,” he reportedly said.

He also reportedly said that he hoped that results from the targeted fuel subsidy systems’ test runs can be brought to the Cabinet by year-end, although implementation will then be left up to the Cabinet.