KUALA LUMPUR – MIDF Research has maintained Malaysia’s gross domestic product (GDP) growth forecast at 6% for 2022 with positive growth momentum to continue following further economic reopening.
The research firm said momentum of growth is expected to improve as the economy transitions into the endemic phase, with further relaxation of Covid-19 restrictions as well as the reopening of international borders.
“Measures like Bantuan Keluarga Malaysia cash handouts and Employees Provident Fund withdrawals, together with improving income and job prospects, will continue to support domestic spending activity.
“We also expect the growing external demand especially for electrical and electronics, palm oil, and petroleum will also support the growth outlook this year,” it said in its monthly economic review for May today.
MIDF Research noted that Malaysia’s economic growth strengthened further as the real GDP expanded faster at +5.0% year-on-year in the first quarter (Q1) of 2022.
“Domestic spending activities expanded stronger during the quarter in line with the increased mobility and also backed by improvement in the labour market. Moreover, the sustained growth in exports also contributed positively to the Q1 GDP growth,” it said.
Despite the stronger than expected Q1 2022 GDP growth, the firm is still concerned about external uncertainties such as the economic slowdown in China, the ongoing Russia-Ukraine war, and prolonged disruption in the global supply chain.
“For now, we maintain our forecast that Malaysia’s GDP will grow faster at 6% this year, compared to 3.1% growth last year,” it added.
MIDF Research views Bank Negara Malaysia’s (BNM) decision to raise the overnight policy rate from 1.75% to 2.0% in its third Monetary Policy Meeting of 2022 as a start of rate normalisation amid strengthening of the domestic economy.
In the Monetary Policy Statement, BNM highlighted that the sustained reopening of the global economy and the improvement in labour market conditions continue to support the recovery of economic activity.
The central bank also highlighted global inflation risk stemming from a sharp rise in commodity prices, supply chain disruptions, and strong demand. – Bernama, June 1, 2022
