Adnan Zaylani Mohamad Zahid: Keynote address - IFN Asia Forum 2024
Keynote address by Mr Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the IFN Asia Forum 2024, Kuala Lumpur, 25 September 2024.
The views expressed in this speech are those of the speaker and not the view of the BIS.
Good morning, distinguished guests.
It always is a pleasure to be back at the IFN Asia Forum 2024. A year ago, we discussed the potential of Asia and the potential contributions of Islamic finance in strengthening regional financial intermediation. Well Asia is certainly delivering amidst global headwinds. Asia's economic growth continues to gain momentum, driven by stronger domestic demand, rebound in tourism, and robust export activity. Undoubtedly there are pockets of weaknesses but the areas of strength offsets these. In 2023, the region recorded 5% growth, exceeding the global growth of 3.3%. Asia also offers many opportunities for the green economy. The market for green businesses in Asia is projected to grow between USD4-5 trillion by 2030, generating over 14.2 million green-related jobs. The region also requires an annual investment of at least USD1.1 trillion to meet climate and mitigation adaptation needs.
As for Malaysia, our long-term GDP growth from 2011-23 averaged 4.3%. This surpassed the median long-term growth rates of regional and A-rated peer countries of 3.6% and 2.9% respectively. We have a positive outlook for the economy. We're expecting this year to be around 5% above our long-term average. Unemployment rate is low, households are still spending, and we have a healthy pipeline of new and on-going projects to support investment in Malaysia. National initiatives under the National Energy Transition Roadmap, New Industrialisation Master Plan 2030 and Green Investment Strategy provide strategic direction as to where we hope capital will flow. So notably, Malaysia recorded a 326% y-o-y growth in green investments to USD1.03 billion in 2023, signalling favourable opportunity in this space.
Malaysia's economic prospects are indeed quite favourable. The ringgit, along with regional currencies, have been appreciating against the US dollar notably since early July following greater clarity on the interest rate path of developed countries, especially the US Federal Reserve. The narrowing of interest rate differentials with the US would be conducive to favour portfolio inflows, especially given Malaysia's positive economic prospects. The domestic landscape is also quite positive. Ongoing government structural reforms, subsidy rationalisation and social protection enhancements offer a window of opportunity to pursue meaningful change. Furthermore, the coordinated actions between the Government and BNM, which has already facilitated a better balance for flows, will continue and this will provide sustainable support for the ringgit. Importantly, ongoing structural reforms by the Government coupled with improving economic prospects will continue to sustain global interest for investment in Malaysia.