Among them are supply chain disruptions, geopolitical risks, high oil prices as well as shortages, an economist told Bernama.
To make matters worse, Juwai IQI Global chief economist Shan Saeed said, these factors are beyond the control of many policymakers and governments.
“History repeats itself after 52 years. In the 1970s, there was stagflation, high inflation and low growth,” he said.
Today, he added, 77 countries or 40% of the global economy, mostly in Europe, Africa and Latin America, are in stagflation.
Saeed said that as a result of the Ukraine-Russia conflict, supply chain bottlenecks and subsequent inflation, global economic projections are being revised downwards.
“The global gross domestic product (GDP) growth for 2022 was initially projected to be 4.4% as of January but it has since been adjusted to 3.6%,” he said.
He said inflation remains higher in advanced economies due to an increase in the velocity of money. “Quantitative easing could not spur growth for many economies,” he added.
However, Saeed said, effective monetary policy by central banks has kept inflation low in Asia.
“There is a great schism between inflation outlook in advanced and Asian economies,” he said.
Citing a report in The Economist magazine, Saeed noted that of the 42 big economies featured in its indicators page, eight still have inflation below 4%. “Six of those eight countries are in East or Southeast Asia,” he pointed out.
“Asian inflation has increased since February but is much lower than in the US and Europe,” he added.
He said inflation in Malaysia is expected to “meander around 2.2% to 2.8% for 2022.
“Global inflation remains high and a stronger US dollar is pushing the emerging market currencies to stay lower. Thus, depreciating currencies bring in inflation in the economy, inviting central banks to raise rates,” he said.
He said Bank Negara Malaysia (BNM) has done a good job in maintaining price and growth stability in the country with the overnight policy rate (OPR) standing at 2.25%.
“BNM has got plenty of room to manoeuvre to bring down the inflation rate through monetary policy levers or the appreciating ringgit.
“Malaysia’s GDP outlook for 2022 is expected to stay between 4% and 5%,” he said.
Saeed said a buoyant outlook and tame inflationary pressures represent the hallmark of successful macroeconomic stabilisation.
“Malaysia continues to stay on global investors’ radar due to its economic confidence and strategic geography in trade and commerce,” he noted.