KUALA LUMPUR, Feb 24 — Lim Guan Eng today assured Malaysians that the 0.7 per cent dip in last month’s Consumer Price Index (CPI), the lowest in nearly 10 years, does not signal recession or that the country’s economy is weakening.

The finance minister said the price decline was largely due to cheaper cost in supply of materials, and added that the lower CPI will boost the buying power of Malaysians.

"The price decline should improve the purchasing power of Malaysian consumers and add to economic growth.

"The economy is going strong and the Government projects the 2019 GDP to expand a further 4.9 per cent after expanding 4.7 per cent last year,” he said in a statement.

Lim said the current price decline is very different from the deflation in 2009, where Malaysia had suffered a recession during the Global Financial Crisis.

He said the price deflation continued after the 2009 recession began, and industrial production had declined significantly prior to that.

"This means the 2009 deflation was caused by a recession as households and companies tightened their belts significantly.

"On the contrary, the January 2019 price decline was not caused by recession or any kind of weak demand,” he said.

Lim said such severe contraction experienced in the 2009 GDP, which went from 5.8 per cent in the first quarter to 1.1 per cent in the third quarter, is nowhere to be seen at present and that the industrial production is rising well based on recent quarters data.

"While the first quarter 2019 GDP and the industrial production figures are still being compiled, current observations on demand suggest both statistics will experience growth,” he said.

Lim said despite the current deflation, the government acknowledges that there is much left to be done to bring the cost of living to a more manageable level, particularly for those belonging to the B40 group.

"The government is working to ensure that the benefits from the reduction in CPI can be channelled downwards to a wider segment of Malaysians,” he said.