Muristek
Higher oil prices to provide temporary support for Malaysia’s fiscal position, says economist
A oil pump is seen at sunset outside Scheibenhard, near Strasbourg. ― Reuters pic
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KUALA LUMPUR, March 9 — The ongoing conflict between Russia and Ukraine appears to benefit Malaysia’s position as a net oil exporter and the sharp rise in oil prices will provide temporary support for the country’s fiscal position, said World Bank senior country economist Shakira Teh Sharifuddin.
She said that while oil prices would provide some support for Malaysia, the outlook remained cautious due to the possibility of the emergence of a new and severe Covid-19 variant.
At the time of writing, Brent crude was trading at US$126.8 (RM530) per barrel.
“Aside from that, we see the economy reopening. As the country’s border reopens, we are gradually returning to pre-pandemic levels and this will drive the economy going forward,” she said during a session held in conjunction with the Malaysia Outlook Conference 2022.
The session, titled Economic Recovery and Resilience in Malaysia was conducted by IDEAS.
Employees Provident Fund (EPF) chief strategic officer Nurhisyam Hussein agreed, saying that while Malaysia does not have a high level of trade exposure with Russia and Ukraine, the former countries are heavily involved in the semiconductor industry and major producers of commodities such as wheat and metals.
Shakira also emphasised the importance of the government continuing to address the issue of social safety nets, particularly for vulnerable groups... a social safety net aimed at meeting basic needs such as food, shelter, health and education as well as efforts to eradicate poverty.
“The government should investigate social safety net issues, particularly when it comes to subsidies and price control, because at the moment, 50 per cent of government subsidies are channelled to fuel, which is not a targeted subsidy, resulting in inefficiencies,” she added.
Meanwhile, Nurhisyam said the country’s recovery trajectory is on the right path with leading economic indicators pointed towards a sustained economic recovery.
“As for EPF, we saw the active membership base improving and returning to the pre-pandemic levels, whereby 7.7 million active members were recorded compared with 7.6 million in December 2020.
“Active monthly contributors increased to 5.8 million versus 5.6 million in December 2020 and an increasing trend observed for members’ registration and contribution upon the reopening of the economy,” he said. — Bernama