fraziali ismail : building malaysia's resilience - lessons from covid19's economic impact and policy responses welcoming remarks by mr fraziali ismail, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the world bank report launch, kuala lumpur, 3 august 2023. * * * ladies and gentlemen, esteemed participants, and distinguished guests, a warm virtual welcome to all. thank you for inviting me to offer some remarks on today's event on " building malaysia's resilience : lessons from covid - 19's economic impact and policy responses ". first off, while joining you all virtually does hark back to the time period we're drawing lessons from, i assure you that it is not intentional. i would much rather be with you in person ; my apologies. this physical distance does remind me of the highs and lows we experienced during the pandemic. it was a time when baking became a global sport. hunting for that gardenia bread became our national treasure hunt and " you're on mute " became the new " hello ". but on a more sombre note, those were also highly trying times for us, when we were scrambling to forecast how the economy was performing, designing policy measures, and figuring out how to communicate. the mood was tinged with despair. we had to keep the economy afloat, while worrying about our family, friends and colleagues. i remember looking for quotes to lift morale and help my team stay positive. one stood out. it was by shams tabrizi, the great mentor of rumi. it reads : " it is pointless trying to know where the way leads. think only of your first step. the rest will come. " truth be told, i never had the chance to use it. the nation was facing a perfect storm of a health crisis, an economic crisis and a political crisis. we were so busy steering our ship through that storm, so busy taking those first steps that i forgot all about the quote until i was asked to speak for this event. and when we emerged on the other side, the rest, as shams tabrizi predicted, had come. our nation survived, battered but far from broken. today, we no longer talk about economic recovery, but the way forward to prepare for the next stage of development, the next crisis, for it will surely come. so swift, steady and sustained has our recovery been that

outlook for economic activity continues, however, to be surrounded by relatively high uncertainty. on the domestic side, uncertainties relate in particular to the evolution of private consumption in relation with consumer confidence. on the external side, persistently high oil prices and continued global imbalances pose downside risks to growth. with regard to those global imbalances, let me note that i fully trust that they can be progressively alleviated only by embarking actively on the homework that has to be done in all g - 7 / g - 3 economies, in particular by correcting the lack of savings in the us and implementing structural reforms in europe. let me add that the ecb is also of the view – and i have signed myself the g - 7 communiques since the meeting in boca raton, at the beginning of last year, that are stressing this point – that the currencies of a number of asian emerging countries are undervalued against major international currencies, in particular the euro and the dollar. this is the case of the chinese currency, but not only of the chinese currency. turning to price developments in the euro area, according to eurostat, annual hicp inflation was 2. 1 % in april, unchanged from the previous two months. over the coming months, annual hicp inflation rates are likely to remain around current levels, partly reflecting upward pressure on energy prices stemming from oil price increases. as regards the labour market, wage increases have remained contained over recent quarters and, in the context of moderate economic growth and weak labour markets, this trend should continue for the time being. overall, we continue to see no significant evidence of underlying domestic inflationary pressures building up in the euro area. this picture is broadly in line with forecasts recently released by international and private sector organisations. however, there continue to be upside risks to price stability over the medium term and these risks warrant continued vigilance. risks are associated mainly with oil price developments and potential second - round effects stemming from wage and price - setting behaviour. in this respect, responsibility on the part of social partners remains very important. our monetary analysis also calls for vigilance regarding upside risks to price stability over the medium to longer term. after moderating in the first half of 2004, monetary and credit growth remain strong, reflecting the stimulative effect on monetary dynamics of the historically very low level of interest rates in the euro area. as monetary dynamics over the past year have mainly been driven