Malaysia: Inflation outlook seen improving in 2021 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the latest inflation figures in the Malaysian economy.

Key Quotes

“Malaysia continued to face deflationary pressures for the seventh straight month, with the decline in consumer prices at -1.5% y/y in Oct (from -1.4% y/y in Sep). Oct’s deflation reading came in line with our estimate and Bloomberg consensus of -1.4%. It was largely attributed to cheaper non-food items particularly fuel, electricity, and passenger vehicles amid softer demand that was exacerbated by lower income and cautious sentiment.”

“Going into 2021, the inflation outlook is expected to remain benign and gain at a measured pace as the domestic economy is seen recovering at a slower and uneven pace. Commodities prices are less likely to spike up drastically with supply glut lingering. Consumer demand and sentiment have also taken a backseat following the resurgence of COVID-19 infections and gloomy job prospects, underscoring underlying inflation expectations. We reiterate our full-year inflation forecasts of -1.0% for 2020 (official forecast: -1.0%) and +2.1% for 2021 (official forecast: +2.5%).”