Malaysia not going into a recession, growth set to continue in 2023 – BNM Governor

KUALA LUMPUR - Bank Negara Malaysia Governor Tan Sri Nor Shamsiah Mohd Yunus said Malaysia is unlikely to go into a recession this year as sustained domestic demand and spending are set to continue anchoring growth.

However, she said that the latest official gross domestic product (GDP) projections would only be released in the new Budget 2023 to be tabled on Feb 24.

She said so far, first-quarter 2023 performance is showing more robust growth compared to the 7.0 per cent recorded in the fourth quarter of 2022.

"We do expect that growth will continue in 2023, but at a much more moderate pace due to slower external demand.

"The important thing I want to emphasise is that we are seeing sustained improvement in the job market and we are going to benefit from the positive impact from China's reopening,'' she told reporters during a press conference on the fourth quarter (4Q) and 2022 GDP statistics released today.

The government also highlighted that strong investment figures alongside a V-shaped recovery in tourism activities are enough to offset a moderation in exports that would emanate from a slower global growth demand.

Concurrently, economic growth is also expected at the global level, she said adding that in fact, the International Monetary Fund (IMF) too, has upgraded their GDP forecasts for 2022 and this year.

In its latest projection, the IMF estimated a 2.9 per cent expansion in 2023 versus the previous 2.7 per cent.

In 4Q 2022, global growth continued to slow amid higher interest rates and slower trade activity. The severe COVID-19 resurgence in China also affected spending and production activity.

Malaysia's economic growth rose to a 22-year record high of 8.7 per cent in 2022 against 3.1 per cent in the previous year, contributed by positive growth in all sectors.

Quarter-on-quarter, the GDP number, however, contracted 2.6 per cent in 4Q versus 3Q 2022.

"The moderation from the high growth in 3Q reflects waning support from stimulus measures,'' Statistics Department Malaysia chief statistician Datuk Seri Dr Mohd Uzir Mahidin said.

Uzir said although the economy in 2022 has surpassed the pre-pandemic level of 2019, three main economic sectors are still below the pre-pandemic level, namely mining and quarrying, construction and agriculture.

''In 2021, the number of employed persons for these three sectors was 2.8 million, which was still 0.1 million lesser than pre-pandemic data.

"Food and beverage, accommodation, real estate, business services, private education, and other services activities were still below pre-pandemic, though the overall services sector has surpassed what was seen in 2019,'' he said.

In 2022, inbound travel expenditure rose to RM27.9 billion from RM0.3 billion in the preceding year.

However, inbound travel is still below the pre-pandemic levels, with tourist arrival accounting for 26.1 million.

"In comparison, outbound travel expenditure rose to RM29.6 billion, more than half of the RM51.3 billion recorded at the pre-pandemic level,'' he noted. - BERNAMA