Kuala lumpur: The Organisation for Economic Co-operation and Development (OECD) has forecast Malaysia's economy to record solid growth of around five per cent on average this year and in 2027 despite global uncertainties. OECD Country Studies director Dr Luiz de Mello said that while there had been ups and downs in Malaysia's pace of economic activity, the organisation's baseline scenario remained positive.

According to BERNAMA News Agency, De Mello noted that Malaysia's resilience in the face of economic fluctuations underscores this optimistic forecast. He highlighted the ongoing global uncertainties, such as the conflict in West Asia and ambiguous policy directions worldwide, which create a challenging economic landscape. Despite these challenges, Malaysia's integration into global value chains positions it to weather potential ripple effects from international crises.

The OECD also addressed Malaysia's approach to fuel subsidies. De Mello commended the reduction of the subsidised fuel quota from 300 litres to 200 litres, which he said is a step towards strengthening public finances by decreasing subsidy expenditures. He advocated for a shift from broad-based subsidies to more targeted assistance, suggesting direct cash transfers to households most impacted by cost pressures, leveraging Malaysia's robust socioeconomic data.

In terms of monetary policy, De Mello recommended that Bank Negara Malaysia maintain a data-dependent approach to manage inflation effectively. This stance would allow the central bank to adjust policies in response to evolving inflationary trends, aligning with the OECD's expectations for a downward inflation trajectory.

Economy Minister Akmal Nasrullah Mohd Nasir provided additional insights, stating that Malaysia has secured its fuel supply through the year's end, despite ongoing conflicts affecting the Strait of Hormuz. He highlighted Malaysia's proactive measures, such as increasing biodiesel usage from B10 to B15, to enhance resilience and ensure sustainable fuel supply without disrupting economic activities.