MAYASIA BUSINESS OUTLOOK8Pakistan inflation rose to a record of 36.4 percent until April, driven mainly by food prices. It is the highest rate in South Asia and started rising from March to a record of 35.4 percent, the statistics bureau said on Tuesday. Pakistan's rural areas recorded food inflation of 40.2 percent, the bureau told Reuters. Food inflation for both rural and urban areas reached 48.1 percent, the highest since FY16 when the bureau started recording the categories separately.Prices rose 2.4 percent in April from March, the bureau said in a press release. "The higher reading was expected over the hyperinflation in the food segment", said Amreen Soorani, Head-Research at JS Capital, a Karachi based Investment company. "While the trend may continue for a couple of months more, the base effect is likely to kick in from June-2023, slowing the pace". The Finance Ministry said that headline inflation is expected to remain at elevated levels in the months to come, despite contractionary monetary policy by the central bank.Pakistan has been in economic turmoil for months with an acute balance of payment crisis while talks with the International Monetary Fund to secure $1.1 billion as part of a $6.5 billion bailout, though this attempt has not been successful. The country has taken measures to try and secure the funding, including removing caps on the exchange rate, resulting in a depreciating currency, increasing taxes, removing subsidies and raising key interest rates to a high record of 21 percent.The Finance Ministry concluded, "Successful completion of talks with the IMF will eventually attract more capital inflows, stabilize the exchange rate and alleviate inflationary pressures". Malaysia's central bank raised its benchmark interest rate unexpectedly in the month of May, citing the need to normalize monetary accommodation because the economy was resilient and it needed to manage persistent inflation. The Bank Negara Malaysia (BNM) increased its overnight policy rate by 25 basis points to three percent. A poll of 25 economists found that the Bank Negara Malaysia's overnight policy rate would remain at 2.75 percent, with only four forecasting a rate hike.BNM held rates steady at its two previous meetings this year as it assessed the impact of four consecutive hikes totaling 100 basis points in 2022. Southeast Asia's economy has recovered strongly from a pandemic-induced slump, with growth reaching a 22-year high of 8.7 percent in 2022, but slowing global demand has clouded the outlook for its energy, commodities, and high-tech exports.According to BNM, recent developments indicate that economic activity will expand further in the first quarter of 2023, driven by strong domestic demand, household spending, and improved labour market conditions. While inflation was expected to moderate, it was predicted that core inflation would remain elevated due to strong demand conditions."With domestic growth prospects remaining resilient, the MPC judges that it is timely to further normalize the degree of monetary accommodation", the central bank said in a statement referring to its monetary policy. According to Government data, the Consumer Price Index rose 3.4 percent year- on-year, analyzed to be the slowest rate in nine months. The central bank expects headline inflation to average between 2.8 percent and 3.8 percent in 2023, up from 3.3 percent last year. According to BNM, Malaysia's economy will grow by four percent to five percent this year. NEWSROOMPAKISTAN SHOWING HIGHEST RATE OF INFLATION IN ASIAMALAYSIA CENTRAL BANK HIKES INTEREST RATE BY 25BPS
< Page 7 | Page 9 >