KUALA LUMPUR (Aug 15): Fitch Solutions Country Risk and Industry Research said following the data release for the second quarter of 2022 (2Q22), it has revised its real gross domestic product (GDP) growth forecast for Malaysia to 5.9% for 2022, from 5.2% previously.

In a report last Friday (Aug 12), the firm said its forecast now lies between the central bank growth target of 5.3% to 6.3%, but remains below the Bloomberg consensus of 6.1%.

“For 2H22 (the second half of 2022), we expect Malaysia’s economic growth to slow down, as pent-up demand eases.

“Furthermore, the softening global economic outlook and tighter monetary conditions will also weigh on exports and investment,” it said.

Fitch Solutions said looking at the GDP by expenditure breakdown, the boost to headline GDP growth was primarily driven by a sharp increase in private consumption (18.3% year-on-year [y-o-y]), due to the reopening or borders and lifting of Covid-19 restrictions.

It said to be sure, the transport subcomponent surged by 91% y-o-y, while recreation services also spiked by 75.1% y-o-y.

“Furthermore, the normalisation of economic activity also supported growth in gross fixed investment, which accelerated to 5.8% y-o-y in 2Q22, from 0.2% y-o-y in 1Q22.

“Exports of goods and services also benefited from the lifting of border restrictions.

“Overall exports grew by 10.4% y-o-y in real terms in 2Q22, up from 8% in 1Q22, and this was mainly driven by a sharp acceleration in the export of services by 49.1% y-o-y, versus 20% in the previous quarter, whereas exports of goods only picked up slightly from 7.1% in 1Q22 to 7.4% in 2Q22,” it said.