PUTRAJAYA: Malaysia is not at risk of recession and is on track to meet forecast economic growth targets of between 5.3% and 6.3% this year, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz says.

Speaking at the ministry’s Hari Raya Aidilfitri open house yesterday, he said the country’s economic growth would be supported by the government’s expansionary fiscal policy as well as accommodative monetary policy.

He noted that the current talk of a global recession was premature and unwarranted, and Malaysia would see further growth momentum in the second quarter after recording a strong first-quarter gross domestic product growth of 5%.

“However, we remain wary of potential downside. There is a potential risk (due to) the war in Ukraine, high commodity prices and global monetary policy tightening.

“As a result, the government will need to ensure adequate fiscal flexibility in the future to manage such risks.

“This is why we intend to gradually reduce the fiscal deficit from 6.4% in 2021 to 6% in 2022 and also rationalise the subsidies to be more targeted,” he added.

Tengku Zafrul pointed out that failure to meet debt obligations was a major risk for countries in the event of a global recession but it was not a risk for Malaysia, as the risk was mitigated due to its low exposure to external debt, with less than 3% in foreign currencies.

He added that Malaysia had ample liquidity to finance the government’s and private sector’s borrowing needs. - Bernama

https://www.thestar.com.my/business/business-news/2022/05/18/malaysia-not-at-risk-of-recession