Higher growth possible with more structural reforms, says BNM governor

BNM governor Nor Shamsiah Mohd Yunus says more structural reforms are needed to generate new growth areas and higher-income jobs.

KUALA LUMPUR: Malaysia with its abundant natural resources and inherent economic strength is capable of achieving a higher growth rate than now with more structural reforms, Bank Negara Malaysia (BNM) governor Nor Shamsiah Mohd Yunus said.

“The global economy is changing and there are many factors driving global growth.

“We need to figure out where we fit in, what our comparative advantages are, and what we need to do now to take advantage of the full potential of our country,” she told Bernama.

Nor Shamsiah said more structural reforms were needed to generate new growth areas and higher-income jobs.

“What will be the foreign labour policy moving forward? What kind of skills do we need to transform the economy as well as take advantage of the technological revolution that is needed if we want to remain relevant going forward?” she asked.

She said reforming the education system was another area that BNM had been vocal about to ensure that Malaysia produces a sufficient labour force with the rights skills.

This was not only important in pushing the country’s growth but also in addressing the cost of living issues, she said.

She said these were some of the economic issues that needed to be addressed urgently to ensure sustainable growth over the medium and long term.

For now, Nor Shamsiah said Malaysia’s economy had the ability to mitigate the impact of external headwinds and grow within the range of 4.3% and 4.8% this year.

Malaysia’s economy expanded better than expected in the second quarter of 2019 at 4.9% compared to 4.5% in the first quarter.

“It is better than expected but it is also due partly to the low base effect.

“In the second quarter of 2018, we suffered a supply disruption and we see the recovery (in the second quarter of 2019), especially in the commodity production,” she said.

Asked if Malaysia needed to brace for a slowdown in the second half of the year, she said it depended on the outcome of trade negotiations between the US and China.

“Yes, there are external headwinds. We are not saying we are immune to or isolated from them.

“We still have some strong economic fundamentals and strength that will help us weather the impact,” she said.