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‘Malaysia’s GDP to grow by 6% in 2022’

‘Malaysia’s GDP to grow by 6% in 2022’

Malaysia’s gross domestic product (GDP) is set to grow by 6% in 2022, a big rise from the 2021 figure of 3.1%, according to MIDF Research.

One of the key drivers of this expected growth will be the lifting of the ban on international travel, which will bring business back to the tourism and hospitality sectors, it said.

The research firm said that thanks to Malaysia’s high rate of vaccination there is no need for the government to tighten coronavirus restrictions, given the ability of the healthcare system to withstand the recent resurgence in Covid-19 infections.

In its Monthly Economic Review, MIDF Research said: “We expect the momentum of growth will continue to strengthen this year, backed by growing domestic spending, improving labour market and increased business activities. Sustained growth in external demand will also support Malaysia’s trade and production activities this year.”

The firm said that although the Ukraine-Russia conflict will not have a direct significant impact on Malaysia’s trade, prolonged disruption in the global supply chain, rising commodity prices and higher import costs were all a threat to growth.

It noted that Malaysia’s total trade in January 2022 stood at RM203 billion or 24.8% year-on-year higher than January 2021, driven by sustained growth in both exports and imports.

“Exports rose at 23.5% year-on-year in January 2022, sustaining double-digit growth for the sixth straight month. The pace of exports growth was, however, more moderate than December 2021 (29.2% year-on-year), reflecting the moderation in manufacturing exports and similar trends observed in regional exports,” it said.

It added that growth in imports grew to 26.4% compared with December 2021 at 23.6% year-on-year, and maintained two-digit growth since February 2021.

On Malaysia’s headline inflation rate, January 2022 headline inflation recorded a four-month low, where it eased to 2.3% year-on-year compared to 3.2% year-on-year in December 2021, dragged by lower price growth of non-food items.

“Core inflation remained on upward momentum, rose by 1.6% year-on-year, the fastest pace in two years. The continuous pick-up in the core consumer price index indicates the revival of growing domestic demand on general prices amid moderate recovery in labour market and economic reopening,” it said.

 

Stats back up the research

Official figures back up the MIDF Research findings, with the Department of Statistics Malaysia (DoSM) saying it was optimistic that the country’s economy will continue to recover in 2022, as it did in 2021.

Chief statistician Mohd Uzir Mahidin said increased global demand, the labour market recovery, Covid-19 vaccination progress, and ongoing support for business from the government have all boosted Malaysia’s economic recovery.

“Overall, this indicated a better economic outlook in the coming months, thus the government’s focus would be directed toward two main thrusts to support the momentum of economic growth, namely job creation and assisting entrepreneurs in growing,” he said. “Malaysia is preparing for the full reopening of international borders in March 2022, which will provide much-needed impetus for tourism-related activities.”