KUALA LUMPUR: Malaysia’s gross domestic product (GDP) growth is projected to hit 8.4% in 2022 compared with 3.1% in 2021, making it the highest among the Asean countries, said Bank Islam Malaysia.
Additionally, GDP growth for the fourth quarter of 2022 (Q4’22) is expected to reach 5.7%.
Bank Islam chief economist Firdaos Rosli (pic) said this will be a better-than-expected forecast despite the political turmoil which began in early 2020 and subsided after the 15th general election in November last year, which culminated in the formation of a multi-coalition government.
“Furthermore, the ringgit reached a historical high of RM4.746 in early November 2022, pressured by the widening interest rates and bond yield differentials.
“We posit that such compelling growth was bolstered by the continued expansion in the domestic demand and a firmer recovery in the labour market, aside from the low-base effect factor,” he said in a note today.
He said private consumption will continue to be the primary driver of economic growth, in addition to China’s reopening prospect that could help limit the decline.
Firdaos also said private investment will remain contentious despite the overnight policy rate being lower than during the pre-pandemic levels.
“That said, we project our economy to grow by 4.5% in 2023 sans the impact of China’s economic reopening and subsidy rationalisation. For the record, the latest multilateral development banks’ (forecasts) project Malaysia to grow between 4.0% and 4.4% in 2023.”
Firdaos opined that sustaining Malaysia’s post-pandemic growth rates will be key amid the global slowdown and impending state elections to ensure the government gains ample fiscal headroom to undertake reforms in the future.
Hence, he said the short-term policy goals will be more prominent than long-term ones in the coming weeks.
“The government is expected to outline some of these goals when retabling Budget 2023, and the remaining ones in the review of the 12th Malaysia Plan in Q3’23.”
On another note, Maybank Investment Bank has estimated real gross domestic product (GDP) to grow at 6.0% in Q4’22, giving the full-year 2022 growth at 8.5%, but it will decelerate to 4.0%this year.
The bank said that single-digit GDP growth persisted in January 2023, taking the cue from the downtrend in the manufacturing purchasing managers’ index.
This is also based on indicators suggesting slower growth in Q4’22, including the industrial production index, volume of services index and the value of construction works, it said.
Hong Leong Investment Bank (HLIB) in its note revised its Q4’22 GDP growth estimate upwards to 6.8% from its preliminary estimate of 5.5% following the release of the latest indicators, adding that the estimate would still point to a slowdown from the preceding quarter.
“In line with the revision, we see upside bias to our 2022 GDP forecast of 8.2%, pending the release of actual 4Q 2022 print,” it said.