3Q GDP hit 14.2%, partly lifted by low-base effect

Bank Negara expects full-year growth to exceed 7%

“Malaysia’s diversified exports would help cushion potential shocks in external demand.” Tan Sri Nor Shamsiah Mohd Yunus

KUALA LUMPUR: Malaysia’s economy grew by 14.2% in the third quarter this year, supported by continued expansion in domestic demand, firm recovery in the labour market, robust electrical and electronics (E&E) as well as non-e&e exports and ongoing policy support.

The growth was partly lifted by the lowbase effect due to the strict containment measures in the third quarter last year, Bank Negara governor Tan Sri Nor Shamsiah Mohd Yunus said.

Given the healthy growth in the first nine months of 2022 (9M22), the full-year 2022 growth will exceed the 7% that was projected earlier, she said.

“An economic crisis is usually associated with a severe contraction in gross domestic product (GDP) growth, higher rates of unemployment, the closure of businesses and a breakdown in financial intermediation.

“We do not see these indicators. GDP has been growing for four consecutive quarters since the fourth quarter of 2021,” she said at a joint press conference with the Statistics Department yesterday.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the services sector expanded by 16.7%, manufacturing 13.2 %, agriculture 1.2%, mining 9.2% and construction 15.3%, Bernama reported.

For instance, higher consumer-related activities amid the recovery in tourism, better labour market conditions and policy support boosted the services sector and for the agriculture sector, it is the higher oil palm output due to receding labour shortages and improved yields, he said.

He said private consumption continued to support growth in 3Q22, with household spending in necessities and discretionary items recording a 15.1% growth year-on-year, while public consumption grew further on higher supply and services value.

The current account recorded a surplus of Rm14.1bil or 3.1% of the GDP, compared with only 1.0% of GDP in 2Q22, largely supported by higher goods surplus due to stronger exports amid high commodity prices.

Foreign direct investment rose to Rm54bil in 9M22 against Rm29.7bil in the same period last year but inflows slowed down on quarter-on-quarter basis amid higher outflow from debt instruments.

Nor Shamsiah said Malaysia’s growth is expected to normalise going into 2023, amid a more challenging external environment.

She said what is important for the country is to secure its future growth prospects to further strengthen the economic fundamentals and improve its resilience while pressing on with the necessary structural reform measures.

“While the global environment is expected to be challenging in 2023, the Malaysian economy will continue to grow. The economy is projected to grow by 4% to 5% in 2023, and continues to surpass the pre-pandemic level.

“A steady rise in employment levels and continued improvement in wages are supportive of spending. The continuation of existing and new infrastructure projects and higher tourist arrivals are expected to support growth in 2023,” she said.

Among the infrastructure projects are the East Cost Rail Link valued at Rm50bil, Light Rail Train 3 worth Rm16.6bil, Central Spine Road worth Rm7.3bil and the Jendela Phase 2 amounting to Rm8bil.

The impact of a sharp slowdown in external demand would be partly mitigated by diversified export products and markets.

“Malaysia’s diversified exports would help cushion potential shocks in external demand,” she said.

The governor said risk to growth remains tilted to the downside, arising primarily from external factors including weaker-than-expected global growth and escalation of geopolitical tension.

Other external factors are worsening supply chain disruptions including the impact from climate change, faster rise in cost of living and inflation, greater financial market volatility as well as political uncertainty, she said.