Bank Negara in its annual report for 2022 said the local banking industry is still resilient and that it does not expect what happened to Credit Suisse will happen here or to any of the local banks.
Exposure to bonds of Credit Suisse has been far-reaching to even banks in Singapore but in Malaysia, the impact has been insignificant. Even the contagion effects of bank failures in the United States of Silicon Valley Bank and Signature have been doused after the Government stepped in to take over and ringfencing the situation within the area.
In its report, BNM stated despite global headwinds, the Malaysian economy is projected to grow between 4.0% and 5.0% in 2023, supported by firm domestic demand. Further improvement in labour market conditions, continued implementation of multi-year investment projects and higher tourism activity are expected to support private consumption and investment growth.
Both headline and core inflation are projected to average between 2.8% and 3.8% in 2023. Inflation is expected to moderate, driven by the lower prices of key commodities. However, the outlook for inflation in 2023 remains tilted to the upside. Upside risks include worsening geopolitical conflict leading to higher commodity prices, extreme weather conditions, stronger-than-expected demand from China and higher input costs due to exchange rate developments.
The resilient domestic banking system and the presence of domestic institutional investors continue to support financial intermediation activities to support economic growth.
Monetary policy will remain supportive of sustainable economic growth while ensuring an environment of price stability.
