KUALA LUMPUR (Feb 10): Malaysia’s economy, as measured by gross domestic product (GDP), grew by 7.0% year-on-year (y-o-y) in the fourth quarter of 2022 (4Q2022), bringing 2022's full-year GDP growth to 8.7%.
The moderation in GDP from the high growth of 14.2% recorded in 3Q2022 was due to waning low base effect and support from stimulus measures, said Bank Negara Malaysia (BNM) at the Economic and Financial Developments for 4Q2022 briefing on Friday (Feb 10).
At 7.0%, the growth was still above the long-term average of 5.1%, driven by private-sector activity, which remained the key driver of growth, supported by private consumption and investment.
Meanwhile, overall export growth moderated in line with weaker external demand.
“This was partly offset by the resilient performance in exports of electrical and electronics (E&E) products and higher tourism activities. The services and manufacturing sectors continued to drive growth,” said BNM in a statement.
Risks remain tilted to downside for 2023
At a press conference on Friday, BNM governor Tan Sri Nor Shamsiah Mohd Yunus said risk to growth remains tilted to the downside due to weaker-than-expected global growth and further escalation of geopolitical tensions.
“The re-emergence of significant supply chain disruptions also impacts growth. Despite the challenging environment, we do not discount the possibility of the growth being higher than expected,” said Nor Shamsiah.
For 2023, the Malaysian economy is expected to expand at a more moderate pace amid a challenging external environment.
However, she said domestic demand will continue to drive growth, supported by the continued recovery in the labour market and the realisation of multi-year investment projects. The services and manufacturing sectors, in particular, will also continue to support growth.
Financing conditions sustained
Credit to the private non-financial sector grew 4.7% in 4Q2022 against 3.5% in 3Q2022 amid the lower outstanding loan growth. Outstanding corporate bonds expanded 4.6%.
Outstanding business loans rose 3.3% as the sustained strong growth in loan repayments outpaced that of loan disbursements.
“Despite the slower growth in loan applications, loan disbursement growth was sustained particularly for working capital loans as firms continued to draw down on their existing credit facilities,” the governor added.
For households, outstanding loan growth expanded 5.5% amid the slower growth in loan disbursements and sustained growth in loan repayments.
“Financing approvals and disbursements remain robust, sustaining above quarterly levels last year. Disbursement, in particular, was exceptionally strong throughout 2022, registering double-digit growth in all quarters although moderated slightly to 12.1% in the 4Q2022,” Nor Shamsiah said.
She noted that the banking sector remains well positioned to support the financing needs of the domestic economy, owing to its financial strength backed by high levels of capital and equity buffers.
“Banks also maintain sufficient provisions against potential credit losses given some households, corporates and small and medium enterprise (SME) borrowers remain vulnerable in the current environment of elevated cost and softer growth outlook,” she said.
Ringgit broadly stable against trading partners
Nor Shamsiah said in 2022, the domestic financial conditions eased following a slower pace of monetary policy tightening along with indications that inflation has peaked, especially in the US, as well as the reopening of China’s economy.
Reflecting the global developments, the ringgit and regional currencies have also been somewhat lifted.
“So far 2023, the ringgit remains on the appreciation path with year-to-date adjustments of 2.4%. The performance of the ringgit against major trading partners also remains broadly stable,” she added.
The nominal effective exchange rate appreciated by 0.4% during the quarter.
“Moving forward, BNM will continue to closely monitor global and domestic financial conditions, and ensure orderly financial market adjustments,” she added.