KUALA LUMPUR (Oct 29): Malaysia's current account balance is projected to record a surplus of RM55.6 billion or 3.5% of the gross national income (GNI) in 2022, according to the Ministry of Finance (MoF), down from the RM56.7 billion or 3.8% of the GNI recorded in 2021.
Gross exports and imports are projected to increase by 1.5% and 1.7%, respectively, from robust global trade growth and improvements in the supply chain.
According to the Economic Outlook 2022 report issued by MoF, in the goods account, a surplus of RM178.9 billion is expected to be registered in 2022 as major trading partners across all economic sectors rebound in growth, leading to higher receipts amid the global technology upcycle.
The services account is anticipated to record a lower deficit of RM57.6 billion, as payments in travel and other service accounts increase, while payments for transportation services are also expected to widen to RM57.3 billion as expansion in trade activities will result in the continuous reliance on foreign transport services.
Malaysians to spend RM30.5b traveling abroad
Meanwhile, receipts in the services account should improve by RM25.3 billion as domestic companies' earnings improve from providing air travel and cargo handling services.
Relaxation in travel restrictions and accelerated global vaccine roll-outs are expected to narrow the deficit of the travel account to RM14.5 billion.
Receipts in the travel account are expected to increase to RM16.1 billion. However, these receipts will be offset by residents' spending abroad, which is estimated at RM30.5 billion, due to pent-up demand, the MoF said.
A wider deficit of RM11.2 billion is estimated in the other services account as expansion in the services, manufacturing and construction sectors take place in 2022.
Primary income is expected to record a wider deficit of RM54.4 billion, with higher payments by foreign investors and resumption of ongoing investment activities, as well as increased compensation for foreign professionals.
The secondary income account, however, is expected to record net outflows of RM11.3 billion in 2022, due to remittances by foreign workers in domestic economic activities.
E&E sector to drive export growth
On gross exports, the MoF wrote that it anticipates growth in the exports of manufactured goods to be underpinned by higher demand for electrical and electronics (E&E) and non-E&E products.
"Ramped-up digitalisation is expected to propel the demand for semiconductors, particularly electronic integrated circuits, processors and controllers which will accelerate the growth of the E&E products by 2.4%.
"The emergence of digital healthcare as a new sector with increased usage of medical devices, such as electro-medical equipment, ultraviolet and X-ray apparatus, is expected to boost exports for the E&E products," the MoF wrote.
Besides that, the ministry forecasts that exports of non-E&E products such as petroleum, rubber and chemical products will improve a marginal 0.9% in 2022.
For more stories on the Economic Report 2021/2022, click here.