KUALA LUMPUR – Malaysia registered a growth of 5.0% in the first quarter of 2022, compared to the last quarter, mainly supported by improving domestic demand as economic activity continued to normalise with the easing of containment measures.
The improvement also reflects the recovery in the job market, with the unemployment rate declining to 4.1% from Q4 2021’s 4.3%), as well as continued policy support, said Bank Negara Malaysia (BNM).
The ringgit depreciated by 0.7% against the US dollar in the first quarter of 2022, in line with the movement of regional currencies.
“This was due to the broad US dollar strength, driven by higher US interest rates, global risk-off sentiment given the conflict in Ukraine, and expectations of modest growth in China.”
However, risks to Malaysia’s growth momentum remain, including a weaker-than-expected global growth, further escalation of geopolitical conflicts, worsening supply chain disruptions, adverse developments surrounding Covid-19 and heightened financial market volatility, said the central bank.
It added that for 2022, headline inflation is projected to average between 2.2% and 3.2% due to an environment of high input costs and improving demand.
“High commodity prices and Malaysia’s recovery prospects had also cushioned the downward pressure on the ringgit from these external factors,” it said in a statement today.
BNM governor Tan Sri Nor Shamsiah Mohd Yunus has kept the annual projected growth at 5.3% to 6.3% as announced in March 2022.
“This is underpinned by stronger domestic demand, continued expansion in external demand, and further improvement in the labour market. Growth would also benefit from the easing of restrictions, reopening of international borders and implementation of investment projects.”
On the supply side, services and manufacturing sectors continued to drive economic growth, expanding by 6.5% and 6.6% respectively. On a quarter-on-quarter seasonally adjusted basis, the economy grew by 3.9% (4Q 2021: 4.6%).
Headline inflation moderated to 2.2% during the quarter (4Q 2021: 3.2%). This mainly reflects the smaller contribution from the dissipating base effect from lower domestic retail fuel prices last year, and the absence of the base effect from electricity tariff rebates implemented in 2020.
Core inflation increased to 1.7% during the quarter (4Q 2021: 0.8%). This reflects price adjustments amid the higher costs and improving demand conditions, with price increases being more noticeable specifically for food items due to supply related factors such as higher global commodity prices. – The Vibes, May 13, 2022
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