Current Account To Stay Resilient, Driven By Strong Manufacturing Exports - BNM

KUALA LUMPUR, March 24 (Bernama) -- Bank Negara Malaysia (BNM) expects the country’s current account to remain resilient over the medium term, supported by robust manufacturing exports.

It said Malaysia’s electrical and electronic (E&E) exports are set to benefit from the global technology cycle expansion, driven by the underlying demand for technology devices and applications.

The continued improvement in global travel demand is also expected to boost the travel surplus and this is further supported by domestic policies leading up to the upcoming Visit Malaysia 2026, BNM said its Economic and Monetary Review 2024 released today.

The central bank said Malaysia is also in a favourable position as a strategic location for new investments by companies that seek to diversify their operations amid the ongoing global trade reconfiguration.

Further, gains from the domestic investment upcycle across a wide range of manufacturing and services activities could lift exports of goods and services in the medium term, it said.

“Nonetheless, challenges remain for Malaysia’s current account balance, particularly from uncertainties surrounding global trade. Hence, policy imperatives should focus on efforts to enhance Malaysia’s exports and boost the tourism sector to strengthen the current account surplus,” BNM added.

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In the services account, Malaysia should continue to enhance tourism offerings to cater for more diverse markets to remain attractive, the central bank said.

“Moreover, policies should further enable the growth and development of domestic capacity and expertise in digital services.

“For example, strategic expansions of the data centre industry in Malaysia can help to advance the country local manufacturers’ capabilities in manufacturing equipment such as cooling systems and server racks,” it said.

Moreover, BNM said, the data centre industry can generate forward linkages, for instance by uplifting local independent software vendors and fostering the development of local cloud computing, which enable them to serve both domestic and international markets.

“This development provides opportunities for Malaysia to create more services exports as our new sources of income and, at the same time, reduce the country’s reliance on imported digital service,” it said.

Malaysia has consistently maintained a current account surplus over the last two decades, primarily supported by continuous net exports of goods, which has offset deficits in the services and income accounts.

“This consistent surplus distinguishes Malaysia from its regional peers and countries with similar credit ratings, many of which have experienced intermittent or even prolonged current account deficits during the same period,” BNM said.

According to the report, the current account balance registered a higher surplus of RM32.8 billion, or 1.7 per cent of gross domestic product (GDP), in 2024 (2023: RM28.2 billion or 1.5 per cent of GDP), supported by the continued surplus in the goods account as well as narrowing deficits in services and secondary income accounts amid a wider deficit in the primary income account.

-- BERNAMA