Analysts raise Malaysia’s 2022 GDP
KUCHING: Malaysia’s 2022 gross domestic product (GDP) forecast has been projected to be at either six per cent or 6.2 per cent, amid improvement in the country’s macroeconomic outlook.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), Malaysia’s macroeconomic outlook is expected to improve further from the second quarter (2Q) onwards as it expects the further relaxation of standard operating procedures (SOPs) and reopening of international borders will support a continued pick-up in domestic economic activities.
To recap, Malaysia’s economic growth strengthened further as the real GDP expanded faster at five per cent year on year (yo-y) in 1Q of current year 2022 (1QCY22), compared to 3.6 per cent y-o-y in 4QCY21.
The growth was higher than MIDF Research’s, CIMB Investment Bank Bhd’s (CIMB Investment Bank) and market expectations.
“The sustained growth in the global economy and high commodity prices will also support Malaysia’s export outlook, and thus sustained growth in exports will be another factor to support economic growth this year,” MIDF Research said.
“However, there are several downside risks which could affect growth outlook. These include concerns over slowdown in China, prolonged disruptions in the global supply chain, ongoing war in Ukraine, and potential volatility in the financial market because of monetary policy tightening.”
Overall, MIDF Research maintained our projection that GDP growth in 2022 will strengthen to six per cent, from 3.1 per cent in 2021.
“We anticipate growth momentum and business outlook will remain positive and domestic economic activities will grow further on the back of economic reopening.”
Meanwhile, CIMB Investment Bank’s GDP growth projection of 6.2 per cent in 2022 assumes that disruptions such as external risks, supply disruptions and foreign labour shortages will gradually wane.
“We expect the domestic demand outlook to remain robust, driven by the broad relaxation of Covid-19 SOPs on May 1, lower unemployment, wage growth, minimum wage hikes and improved investment appetite,” the research firm said.
“The strong GDP outturn underscored BNM’s decision to raise the overnight policy rate (OPR) on May 11, and we expect the next 25 basis point (bp) hike to come in quick succession in July.”