Malaysia's LI still points to growth, GDP growth forecast maintained at 6.6 per cent for this year - MIDF
03 Oct 2022 12:07pm
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The LI predicts the country’s economic direction four to six months ahead on average.
"We maintain our 2022 gross domestic product (GDP) growth forecast at 6.6 per cent strengthening from the weak growth last year which was affected by the nationwide lockdown.
"Recent indicators continued to show improvement with the continued expansion in the LI signalling positive growth momentum to continue in the next few months,’’ the research house said in its monthly economic review today.
However, MIDF Research reckons that the sharp monthly decline in the LI in July 2022 of minus 2.0 per cent from June’s 0.4 per cent was an early sign of softer growth prospects.
"Despite the optimism, we are wary of the impact of global inflation and global policy tightening which could hit growth prospects especially going into 2023.
"To a certain extent, any sharp slowdown in global demand could affect Malaysia’s trade and growth outlook,’’ it added.
Other downside risks to the near-term outlook include increased volatility in global financial markets, weaker growth in major trading partner economies such as the US and China, and a sustained rise in inflation.
Renewed disruptions to global production and trade such as an escalation of geopolitical tension, upward cost pressures and prolonged shortage of materials and labour will also weigh on growth prospects.
"Despite the external uncertainties, we believe Malaysia will be able to face this global slowdown due to its diversified export products and assuming the softening of global demand will not be as significant as in previous crises and also if the expansion in domestic demand can be maintained,’’ it said. - BERNAMA
