Malaysia’s GDP growth forecast at six per cent for 2022

KUCHING: Analysts have maintained their gross domestic product (GDP) growth forecast at six per cent for 2022, as expansion in the economy will be boosted by the continued recovery in private consumption as well as the growing external demand.

According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), the transition to the endemic phase and the reopening of international borders from April 1, 2022 indicate that growth prospects for Malaysia’s economy will be better going forward.

“The expansion in the economy will be boosted by the continued recovery in private consumption as well as the growing external demand,” MIDF Research said.

“Several sectors such as manufacturing and plantation will benefit from the arrival of foreign workers as companies strive to improve supply and delivery to cope with the recovering demand.”

That said, MIDF Research noted there are certain downside factors, in particular, the rising global prices in view of the tensions between Russia and Ukraine which might exert stronger inflationary pressure on both the consumers and local producers.

The research arm also opined that the latest lockdown in parts of China recently and the softening global demand due to the elevated inflation could hurt Malaysia’s trade performance.

“Consequently, taking into account the upside and downside risks, we maintain our projection that Malaysia’s economy will expand stronger at six per cent this year.”

As for Bank Negara Malaysia (BNM) deciding to keep the Overnight Policy Rate (OPR) unchanged at 1.75 per cent in its second Monetary Policy Meeting of 2022, this was in line with MIDF Research’s and market’s expectations.

“The current rate is deemed to be appropriate and supportive of Malaysia’s economic growth.

“In the Monetary Policy Statement, BNM highlighted that the growth momentum is expected to improve in 2022 underpinned by expansion of global demand, higher private expenditure, improvements in labour market and continued targeted policy support.

“Reopening of international borders will add further support for the economy.”

As such, MIDF Research viewed that the decision to keep OPR at current low levels is appropriate to provide support to Malaysia’s economic recovery.