KUALA LUMPUR: Malaysia’s economy is heading towards the right direction despite the challenging environment, especially with the expectation of a higher inflation rate, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said.

He said however, with the strong gross domestic product (GDP) growth of 5.0 per cent in the first quarter of 2022, which was above expectation, the inflation remained comparative low.

“We have increased the subsidies for petrol, some of the foods, goods, and essentials, hence, it has helped the inflation remain quite low for Malaysia. Inflation in Malaysia last month recorded 2.2 per cent... So that’s still good.

“What we need to focus on now is to be more targeted in subsidies. I don’t think we can have a subsidy that’s meant for all, but for the vulnerable groups, which I think they still need us,” he said in an interview on CNBC today,

The interview was held in conjunction with his attendance at the World Economic Forum (WEF) Annual Meeting 2022 in Davos, Switzerland from May 22-26.

Tengku Zafrul noted that Malaysia’s unemployment rate, which peaked at 5.3 per cent (in May 2020), decreased to 4.1 per cent last month.

Tengku Zafrul said Malaysia faced various challenges within the region, including geopolitics that have affected the supply chain, as well as the lockdowns to curb COVID-19 imposed by China, Malaysia’s biggest trading partner.

“However, as Malaysia is a net exporter of commodities, this will then enable us to cushion some of those impact,” he added.

He said the government will continue its fiscal expansion policy with the extra revenue received (as net exporter of commodities) to cushion the impact on the vulnerable groups. - Bernama