The inflation rate for next year is estimated to expand to 2% due to the new fuel subsidy scheme, which will see the price of RON95 petrol gradually increasing towards a market-based float system.
The projection is contained in the Finance Ministry’s 2020 Economic Outlook Report.
The report said the consumer price index, which is a measure of inflation, stood at an average of 0.5% between January and August.
It said the low inflation rate in the first eight months of the year was due to a cap on RON95 at RM2.08 per litre, and diesel at RM2.18 per litre.
The projected rise in inflation also takes into account the departure levy, which came into force last month, it said.
“Inflation projections are also dependent on the ringgit’s exchange rate to foreign currencies, and the unstable price of oil worldwide due to trade tensions and geopolitical factors.”
The labour market is expected to remain stable next year with the addition of new jobs, while the unemployment rate will remain at 3.3% of the population.
The report said the workforce is estimated to increase to 15.3 million next year from 15.1 million this year.
Of the 15.3 million employees, about 62.1%, or 9.5 million, are estimated to be in the services sector, manufacturing (16.2%) and agriculture (12.2%).
Documented foreign workers increased to two million as of August, with more than 35% from Indonesia, followed by Bangladesh (28.75%) and Nepal (15.7%).
Putrajaya will continue its efforts to reduce dependence on low-skilled foreign labour, said the report, adding that the latest initiative is the extension levy for workers who have served more than 10 years in the agriculture sector. – TMI
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