Dr Yeah Kim Leng
KUALA LUMPUR: Malaysia, which is seeing higher domestic consumption, needs to ensure there are no excessive price pressures as with the improving external environment, the country may see growth exceeding expectation, says an analyst.
RAM Holdings Bhd group chief economist Dr Yeah Kim Leng said if domestic demand grows more strongly than capacity, the nation could see demand-pull inflationary pressures kicking in, resulting in higher prices.
He said so far, there had been no evidence of demand-pull inflation.
“However, last year there were some concerns over the rise in commodity prices and cost-push inflation, but both are coming down,” he told Bernama on the sidelines of the ‘Seminar on the Bank Negara Malaysia Governor’s Address on The Malaysian Economy & Panel Discussion’ here earlier.
Yeah said for long-term sustained growth and productivity increases, it was important to further liberalise so that the increased competitiveness and competition will drive efficiency and productivity higher.
He said Malaysia was seeing gradual liberalisation, especially in its operating environment as a result of the Government Transformation Programme (GTP), but there was still a need for efforts to further liberalise and strengthen the competitiveness foundation.
Yeah said the key fundamentals were already in place, and now was the time to remove whatever was still holding back Malaysia’s move towards a more efficient and competitive economy.
The private sector would have to respond to all these forces of change and innovation that would drive up efficiency and economic diversification, he said.
“By driving that up, we can have an economy built on a strong competitive foundation, and because of rising economic efficiency and competitiveness, Malaysia can, in terms of exports, continue to compete with other countries.
“Domestically, a very strong, efficient and competitive economy would further attract firms to continue their upgrading and shift towards higher value added activities,” Yeah said.
Meanwhile, president of Malaysia Economic Association Tan Sri Mohd Sheriff Mohd Kassim said, “In advanced countries, consumer spending spurs the economy, but they are now faced with problems, unemployment has risen in European countries and incomes have declined, resulting in lower consumer spending.
“It is different in Malaysia, we have full employment, incomes and spending power have risen, so consumer spending has risen, resulting in good growth for businesses and the services sector.” — Bernama