(Updated)

Malaysia’s 2022 GDP growth may surpass official estimate, says Tengku Zafrul

Tengku Datuk Seri Zafrul Tengku Abdul Aziz (Bloomberg filepix)

Tengku Datuk Seri Zafrul Tengku Abdul Aziz (Bloomberg filepix)

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KUALA LUMPUR (Sept 12): Malaysia's economic growth may surpass the official estimates of between 5.3% and 6.3% in 2022, as the country saw faster growth in the second quarter at 8.9% and expected strong performance in the third quarter.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said Malaysia is likely to chart even stronger growth in the third quarter, despite facing a weaker global economy, as well as the rising US dollar.   

"The new number (forecast) will be announced on Oct 7. 

"Also important is that inflation in Malaysia is now around 2.8% in the first seven months, our monetary policy remains accommodative although Bank Negara Malaysia (BNM) has increased the overnight policy rate (OPR) by (another) 25 basis points to 2.50%, which is still lower than what it was before the (Covid-19) crisis at 3.0% to 3.25%," he said at the Recovery and Resilience: Spotlight on Asean Business forum on Monday (Sept 12). 

The half-day hybrid forum was organised by Bloomberg

Tengku Zafrul said subsidies have helped to soften the blow of high energy prices on Malaysians and also in managing the inflation rate, however, the subsidy bill would be in the region of RM80 billion this year, which is the largest in the country's history.

"We are fortunate to see where we are today this year. Of course, Malaysia being a net exporter of commodities has helped. We are an integral part of the (global) supply chain for manufacturing," he added. 

As for Budget 2023, the finance minister said the government would be focusing on three key areas, namely maintaining economic growth, making sure the economic growth is sustainable and inclusive, and fiscal responsibility.

Tengku Zafrul noted that the financial sector has remained stable amid the gradual tightening of interest rates by BNM. “Obviously, there are side effects from an increasing interest rate to the economy. (But) what we have seen is that our economy is growing strongly, so we can afford to increase the rate,” he said. 

On the ringgit, Tengku Zafrul stressed that the government would not be too fixated on the performance of the currency, as it continues to focus on the mid-to-long term performance of the economy. 

“You have to understand the inflation rate in the US. The monetary tools that are available in Malaysia or other markets depend on the economic scenario of the particular country.

“The inflation rate in Malaysia in the first six- to seven months (of 2022) was 2.8%, so we could have an accommodative economic policy, (with) very large fiscal support,” he added.