Despite a significant slowdown, Malaysia’s economy experienced strong growth in the fourth quarter of 2022, driven by private consumption and investment. This brought the year’s overall growth to the highest level in 22 years.
According to Bank Negara Malaysia data released on Friday, growth in the gross domestic product, or GDP, increased by 7.0 percent in the fourth quarter, but at a rate that was more than halved from the 14.2 percent seen in the third quarter.
In comparison to the third quarter’s 1.9 percent expansion, the economy experienced a 2.6 percent quarter-over-quarter contraction.
However, economic growth was 7.2% higher than it was prior to the pandemic.
The economy grew by 8.7 percent overall in 2022, which is significantly more than the 3.1 percent reported in 2021. In 22 years, this growth was the largest.
Private consumption contributed 58.2 percent to GDP in the fourth quarter, driven by the strengthening of the labour market.
Private consumption increased by 7.4% yearly, but at a slower rate than the quarter-to-quarter increase of 15.1%. Gross fixed capital formation also increased by 8.8% percent.
Due to slower growth in goods and services, both exports and imports grew at a moderate rate of 9.6 percent and 8.1 percent, respectively. Government spending growth slowed to 2.4 percent in the meantime.
A challenging external environment is expected to cause the economy to grow more slowly, according to the central bank.
On the strength of the labour market’s ongoing recovery, domestic demand is anticipated to be the main driver of growth. The manufacturing and service sectors are expected to contribute to economic expansion as well.
The BNM predicted that increased tourism activity would partially cushion the slowdown in exports caused by weaker global demand.
On the price front, the bank stated that despite continuing cost and demand pressures, headline and core inflation are expected to moderate but remain high in 2023.
The Malaysian economy is anticipated to struggle over the upcoming quarters, according to economist Shivaan Tandon of Capital Economics. Undoubtedly, the economist said, the reopening of the international border will boost growth.
Rate hikes will continue to be high for the foreseeable future, Tandon said, despite the central bank’s indication that additional rate increases are unlikely.
According to separate data, the current account surplus increased significantly from the third quarter to the fourth, rising to MYR 25.7 billion from MYR 14.1 billion. Lower primary income deficit and net exports of goods were the main drivers of the improvement.
Info Source – RTT News