KUALA LUMPUR (July 25): Malaysia’s gross domestic product (GDP) is likely to moderate to 4.1% in 2023, from 5.2% in 2022, according to CGS-CIMB Research.

The research firm, quoting SERC executive director Lee Heng Guie, said there is growing risks of a global recession and US recession in 2023. He also projects an interest rate of 2.5% at end 2022 and 3% at end 2023.

“If there is a US recession, he expects GDP contraction to be mild and shallow for six to eight months. He predicts [the] US Fed to remain hawkish for longer, raising the Fed Funds Rate to a peak of 4% in 1H23F,” it said in a note dated July 22.

According to CGS-CIMB, Malaysia’s external trade will also feel the impact of the global slowdown as the country’s growth correlation with the global economy has gotten stronger over the past 10 years.

“The tight labour market is also likely to continue given the limited inflow of foreign workers relative to what the country needs,” it said.

CGS-CIMB hosted 320 institutional investors at its Malaysia Virtual Corporate Day on July 19, with various expert speakers in the fields of economics, consumer and Malaysian politics and five corporates (Yinson Holdings Bhd, Telekom Malaysia Bhd, Petronas Chemicals Group Bhd, IOI Corp Bhd and Malaysia Airports Holdings Bhd) who shared their insights into pressing current issues and outlook for the second half of 2022.  

In the upcoming 15th general election (GE15), CGS-CIMB said, the current most likely potential scenario is Barisan Nasional (BN) gaining majority seats in West Malaysia and forming the government.

The research firm, quoting Merdeka Centre of Opinion Research co-founder and director of programmes Ibrahim Suffian, revealed that should UMNO's party election take place after GE15, then the first window to potentially hold the general election would be between November and December 2022.

Meanwhile, the second window would be from end-February 2023 until before Ramadhan (which starts April 22, 2023), while the third window would be between June and July 2023.

“On election outcome, his first and most likely scenario is that status quo would be maintained, and the three coalition parties and other independents — BN, Pakatan Harapan, and Perikatan Nasional — will contest against each other in the GE15. Under this scenario, he expects BN to gain majority seats in West Malaysia and potentially form the government with Sarawak Parties Alliance,” the research house added.