Inflation in developing countries such as Malaysia and Indonesia is expected to return to more stable readings at the same rate as other developed countries.
The matter was commented by Moody Analytics analysts in a note stating that the use of large government subsidies in maintaining domestic prices will help ease inflationary pressures.
The note further explained that Malaysia and Indonesia are rich in natural resources such as energy commodities and minerals which will reduce import dependence as well as exposure to external inflation.
Taking the example of Indonesia, the country applies domestic market obligations to its commodities that require businesses to sell a portion of domestic revenue at a discount.
Meanwhile, the firm made comparisons with developed countries that lack natural resources such as Singapore, Hong Kong and South Korea.
According to him, these countries have to take prices and are more vulnerable to external inflation due to lack of natural resources to import.
In fact, the economies of these countries are more specialized in high value-added industries such as high-tech manufacturing that uses imported inputs.
On the other hand, inflation in Australia and New Zealand will be successfully tackled with monetary policy that is in its best 20 -year track as well as strong government policies to ensure economic growth.
