Stanchart: Inflation Rate May Rise To 3.4 Per Cent In First 9 Months 0f 2014

KUALA LUMPUR, Jan 9 - Malaysia's inflation rate is expected to edge up to 3.4 per cent for the first nine months of this year from 2.1 per cent in the same period in 2013 driven by slower consumption as prices of consumer products have increased.

Standard Chartered Bank (StanChart) South East Asia Global Research Regional Head of Research Edward Lee Wee Kok said the slower consumption was because goods have become more expensive due to further subsidy rationalisation.

"You have less income to buy the goods. This would possibly lower the private consumption for the economy," he told reporters after a briefing session on "Rising East, Emerging West" Thursday.

Lee noted that the inflation projected for Malaysia this year was the highest among its regional peers.

Domestic demand had been the main contributor to economic growth in the past few years and this would continue to remain resilient despite the subsidy rationalisation, he said.

The bank is bullish on external oriented sectors such as logistics and manufacturing, which are more cyclical and could benefit from the recovery in Western countries.

Lee said the full-year global economic growth was projected to reach 3.5 per cent in 2014 compared with 2.7 per cent in 2013.

Standard Chartered has forecast a gross domestic product growth of 5.3 per cent for Malaysia this year from a projection of 4.7 per cent in 2013.

He added that the ringgit is expected to continue a depreciating trend against the US dollar following the US Federal Reserve's plan to scale back its bond-buying programme.

BERNAMA