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10 February 2023. Friday
KUALA LUMPUR (Feb 10): Malaysia’s economy, as measured by gross domestic product (GDP), grew by 7.0% year-on-year (y-o-y) in the fourth quarter of 2022 (4Q2022), bringing 2022’s full-year GDP growth to 8.7%.
The moderation in GDP from the high growth of 14.2% recorded in 3Q2022 was due to waning support from stimulus measures and the low base effect, said Bank Negara Malaysia (BNM) at the Economic and Financial Developments for 4Q2022 briefing on Friday (Feb 10).
At 7.0%, the growth was still above the long-term average of 5.1%, which was driven by private-sector activity, which remained the key driver of growth, supported by private consumption and investment.
Meanwhile, overall export growth moderated in line with weaker external demand.
“This was partly offset by the resilient performance in exports of electrical and electronics (E&E) products and higher tourism activities. The services and manufacturing sectors continued to drive growth,” said BNM in a statement.
The central bank added that headline inflation moderated to 3.9% during the fourth quarter, compared with 4.5% in 3Q2022, mainly due to the lapse in the base effect on electricity inflation, a major cause of the higher inflation in 3Q2021.
“The moderating trend in key global commodity prices partly led to lower inflation for some consumer price index (CPI) items, including fuel. Inflation for some key staple food items, such as fresh meat and eggs, also moderated during the quarter,” BNM said.
However, the downward impact of these factors was partly offset by higher core inflation, which increased to 4.2% from 3.7% in 3Q2022, driven by continued strength in demand amid a still-elevated cost environment.
For 2022 as a whole, headline inflation increased to 3.3%, and core inflation averaged higher at 3.0%.
“Headline and core inflation are expected to moderate, but remain elevated in 2023, amid lingering cost and demand pressures. Core inflation is expected to remain elevated in the near term, in part due to the low base in the first half of 2022.
“Existing price controls and fuel subsidies, and the remaining spare capacity in the economy, will continue to partly contain the extent of upward pressures on inflation. The inflation outlook remains highly subject to any changes to domestic policy, as well as global commodity price developments,” BNM said.
The central bank added that domestic demand will be key to Malaysia’s growth performance in 2023.
“The Malaysian economy is expected to expand at a more moderate pace amid a challenging external environment. Domestic demand will continue to drive growth, supported by continued recovery in the labour market and the realisation of multi-year investment projects,” said BNM.
The services and manufacturing sectors will also continue to support growth.
BNM said the balance of risks remains tilted to the downside, mainly from weaker global growth, tighter financial conditions, re-escalation of geopolitical conflicts, and worsening supply chain disruptions.
More to come
