AMRO Chief Economist Hoe Ee Khor – Malaysia is attracting significant capital inflows.
By Tengku Noor Shamsiah Tengku Abdullah
Singapore, Oct 4 – The ASEAN+3 Macroeconomic Research Office (AMRO) has maintained its growth forecast for the Malaysian economy to grow at 4.7% for 2024 and 4.9% for 2025.
According to the latest quarterly update of the Asean+3 Regional Economic Outlook (AREO) released Thursday, the estimates are similar to its July 2024 quarterly update.
In a virtual briefing on Thursday, AMRO chief economist Hoe Ee Khor Khor, has offered positive insights on Malaysia’s economy and its currency, the ringgit.
He pointed out that Malaysia is attracting significant capital inflows, which is contributing to the ringgit’s strength. Additionally, Malaysian investment corporations repatriating their overseas earnings have bolstered the currency further.
One key factor supporting the ringgit is the narrowing interest rate differential between the U.S. and Malaysia, influenced by U.S. Federal Reserve rate cuts.
This has fueled carry trades that favor the Malaysian currency, positioning it as one of the region’s top performers.
Regarding economic growth, Khor mentioned that Malaysia’s GDP growth is forecasted to remain strong at 4.7% for 2024, with potential to reach 4.9% by 2025.
The country’s ability to attract substantial foreign direct investment continues to support this outlook, and there is optimism that with stronger investment realization, Malaysia could exceed its growth targets.
However, Khor also highlighted challenges such as the need for Malaysia to rebuild its fiscal space post-pandemic and improve competitiveness through targeted subsidies and investment in skilled labour and infrastructure.
Khor said: “There is potential for Malaysia to exceed our current growth estimate of 4.7%.” “If investment implementation is stronger than anticipated, the growth rate could be higher.”
He noted that enhancing Malaysia’s fiscal position could further boost investor confidence, potentially attracting more foreign investments.
Touching on the local currency, he said the ringgit, has demonstrated notable strength, appreciating from its yearly high of RM4.75 against the US dollar in April to approximately RM4.20 recently. This makes it one of the best-performing currencies in the region so far.
AMRO is dedicated to promoting macroeconomic and financial stability in the ASEAN+3 region. It conducts economic surveillance, supports financial arrangements, and provides technical assistance to its member countries, which include the 10 ASEAN nations, China, Hong Kong, Japan, and Korea.
- TNS News