KUALA LUMPUR (Feb 24): Malaysia’s inflation rate is expected to rise to between 2.8% and 3.8% in 2023 amid slower economic prospects and stable commodity prices, according to the Ministry of Finance (MOF)’s revised Economic and Fiscal Outlook 2023 report.
This represents an adjustment in the upper band of the previous government’s forecast announced last October, which projected headline inflation between 2.8% and 3.3% this year.
MOF warned in its latest report that foreign exchange rate fluctuations and ongoing supply disruptions could affect the inflation outlook for this year.
“Empirically, a one percentage point change in the exchange rate and crude oil price has an impact of 0.337 and 0.112 percentage points on inflation, respectively,” it said.
Employment rate at between 3.8% and 4%
The unemployment rate for 2023 is expected to come in at between 3.8% and 4%, said the revised Economic and Fiscal Outlook 2023 report.
The labour market in 2023 is expected to sustain the recovery momentum, driven by expansion in all economic sectors and the need for more workers to support domestic demand.
“Despite the youth unemployment rate still in the double-digit, it has shown a downward trend,” said the report.
The accommodative policies to facilitate the adequate supply of workers for business activities, particularly in labour-intensive industries, will be continued to encourage more employment opportunities, particularly for youths.
“Thus, the total employment is projected to further expand by 1.7% to 15.6 million persons, with more than 80% of employment opportunities available in the services and manufacturing sectors,” it said.
Additionally, continuous efforts to attract quality investments and expedite digitalisation will allow the creation of more high paying and high productivity jobs in the economy.
“These will contribute to better income prospects for the workforce and improvement in the overall compensation of employees,” the report added.