Malaysia will not face BOP crisis

KUALA LUMPUR: Malaysia will not face a balance of payments (BOP) crisis as the country has been consistently registering current account surpluses, says Bank Negara Malaysia (BNM) Deputy Governor Datuk Marzunisham Omar.

He said the central bank also expects the country to record another round of current account balance surplus this year, thanks to earnings from tourism and higher returns from exports versus imports.

“We have been having a current account balance surplus for the past 28 years,” he told a media briefing in conjunction with the release of BNM’s flagship publications — Annual Report 2023, Economic and Monetary Review 2023, and Financial Stability Review for the Second Half of 2023, here today.

In addition to the export recovery forecast by the central bank, he said the tourism sector is a big foreign exchange earner for the country.

“Last year, 20.1 million tourists came to Malaysia, and this year, the (Tourism, Arts and Culture) ministry is expecting about 27 million tourists.

“With the visa liberalisation for Chinese tourists and the ringgit being the way it is, Malaysia continues to be very attractive,” he added.

Marzunisham was responding to a question on the country’s trade balance and whether there is a possibility that Malaysia would face a BOP crisis similar to Sri Lanka.

In its Economic and Monetary Review 2023 Report which was released today, BNM said the current account of BOP is expected to register a higher surplus of between 1.8 per cent and 2.8 per cent of the gross domestic product (GDP) this year.

The central bank said this would be an improvement from 1.2 per cent of the GDP last year, which was the lowest recorded current account balance since 1997 (-5.9 per cent).

According to the report, BNM said the improvement was driven mainly by a higher goods surplus amid a lower deficit in the services account.

“The goods account is projected to record a higher surplus, as export growth recovery more than offset the rebound in import growth,” said BNM.

BOP provides detailed information concerning the demand and supply of a country’s currency.

If a country is grappling with a major BOP difficulty, it may not be able to expand imports from the outside world while a country experiencing a significant BOP surplus would be more likely to expand imports. – BK