KUALA LUMPUR (Oct 3): MIDF Research sees Malaysia’s gross domestic product (GDP) expanding 6.6% this year, from 6.0% previously, on expectation that the growth momentum would continue in the second half of 2022 (2H 2022).
The research house expects a continued pick-up in consumer spending, improved business activities, and sustained growth in external demand during the period.
It said further improvement in the labour market and better employment prospects will help support consumption expenditures, although consumers are more cautious in their spending due to the rise in the cost of living.
“We remain wary of the possible downward risks mostly from external developments such as weak recovery in China’s economy, the risk of recession and a sharper slowdown in the US (and the global economy), the ongoing war in Ukraine, an escalation of geopolitical tensions, as well as high inflationary pressures globally from elevated commodity prices.
“Considering both upside and downside factors, we estimate Malaysia’s GDP growth to register 4.2% for 2023, a moderation from 2022,” it said in a noteon Monday (Oct 3).
MIDF reckons that GDP growth would normalise in the fourth quarter of 2022 (4Q 2022) based on the current trend of macro data, and believes Malaysia’s GDP growth will reach a double-digit rate in the third quarter.
“We expect domestic demand to record solid growth amid continued improvement in the labour market, stable inflationary pressures, and supportive fiscal and monetary policies,” it said. "Going into the fourth quarter, we believe the GDP growth will normalise, as low-base effects will fade away.”
The research firm projects the domestic economy to expand by 2.8% year-on-year (y-o-y) and 3.2% quarter-on-quarter (q-o-q) in the final quarter of this year, amid continuous strong domestic economic fundamentals.
It also expects global economic growth to moderate to 3% this year, as the low base effect wanes and the pace of growth will be back to more normalised levels this year, after the robust 6.1% rebound last year.
“While the war in Ukraine and the reintroduction of Covid-19 lockdowns in China had led to a downward revision to the global growth outlook, the continued tightening of monetary policy by central banks in many countries has caused a shift in the narrative that the global economy may be experiencing slowing growth heading into 2023,” the research house noted.