He said the previous increase in interest rates in May and July by an overall 50 basis points had no obvious effect, with the weakening of the ringgit causing businesses to pay more for imported materials.
“Despite high oil and palm oil prices, the ringgit continues to depreciate when it should be strengthening.
“While the government continues to express optimism that Malaysia can achieve the 2022 projected economic growth of up to 6.3%, this sentiment is not shared by the International Monetary Fund, which lowered its growth target for Malaysia to at best 5.6% for 2022,” he said in a statement.
Yesterday, BNM governor Nor Shamsiah Mohd Yunus said there was little likelihood that the OPR would be increased significantly before the year’s end.
Today, however, OCBC’s economist Wellian Wiranto was reported as saying there could be a possibility that the OPR would be raised again by 25 basis points by then, taking into account “incipient price pressures”.
Lim also asked if the 8.9% growth in the second quarter was a result of private sector consumption and the RM10,000 one-off Employees Provident Fund (EPF) special withdrawals in April.
“If so, then growth for the third and fourth quarter may not be so robust since the effect from the expenditure of the RM10,000 one-off EPF special withdrawals amounting to RM44 billion would have greatly dissipated by then,” he said.
Lim said there were also concerns that the strong second quarter numbers were too reliant on domestic demand, especially the EPF withdrawals factor.
“Since there are no more RM44 billion one-off EPF special withdrawals in the pipeline, Malaysia’s immediate economic growth will depend on external demand – which is subject to slower global growth.”
Lim said if the EPF withdrawals were not behind the private sector consumption growth of 18.3%, then BNM should find out what could have led to the surge in the second-quarter numbers.
The 18.3% increase in private sector consumption was previously reported as the primary driver for the 8.9% growth in the second quarter. A 6.3% investment growth was also credited for this second quarter surge.