PETALING JAYA: Malaysia is not going into a recession this year as its gross domestic product (GDP) is expected to normalise to 4.1% on the back of moderating exports and pent-up demand normalisation, according to a think tank.
Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said: “We do not see Malaysia slipping into a recession, we just see slower growth as inflation and cost-of-living pressures continue to weigh on domestic spending”.
Lee added that the slow start is also due to the momentum coming off from a higher base last year, when the country recorded an 8.7% GDP growth rate.
Similarly, the country’s exports continued to exhibit slow momentum during this year’s first quarter, reflecting the dampening effects of weaker global demand, and easing prices of energy and commodities.
Meanwhile, this year’s headline inflation is expected to rise between 2.8% and 3.5%, with Lee adding that a policy change on subsidies would carry a substantial impact on the price level of goods and services.
The research institute also predicted the overnight policy rate to go up 25 basis points to 3.0% sometime in May this year. However, Lim said that the Malaysian economy should be able withstand another hike.
Improving Retirement Security
During the launch of its economic quarterly report, SERC highlighted the precarious situation that prospective senior citizens face as Malaysia prepares itself to become an ageing country by 2030.
One of the measures that SERC proposed is for the government to increase the retirement age, which it said could boost productivity and social security of future retirees.
In order to implement this, Lim argued, the government must first downsize the public workforce, which is currently bloated and would add a huge strain on the national budget if a higher retirement age were to be mandated.
Another one of its suggestions is the introduction of reverse mortgage, a concept that is still unfamiliar to many Malaysians but has gained considerable traction overseas.
In December 2021, national mortgage corporation Cagamas Bhd launched its Skim Saraan Bercagar with an allocation of RM100 million to kickstart the reverse mortgage scheme in Malaysia.
Under the scheme, an eligible homeowner may borrow money against the value of their home and receive funds in the form of fixed monthly payments, a lump sum or line of credit.
Any homeowners aged 55 and above in Malaysia are eligible to apply for the reverse mortgage scheme as long as they are full-time residents of the registered property.
The scheme was first launched for senior homeowners in Klang Valley, and was later expanded to include Penang, Johor Bahru, Ipoh, Seremban and Melaka.