Bank Negara Malaysia (BNM), Malaysia’s central bank has warned that Malaysia will probably reach the lower ends of its previous full-year growth forecast this year. This is due to Malaysia only recording a 2.9% second quarter Gross Domestic Product (GDP) growth.
This is the lowest GDP recorded in two years. It is notable as the previous 2 years were impacted by the pandemic lockdowns. The previous dip was in the third quarter of 2021 where Malaysia recorded 4.2% GDP growth.
During 2021, many countries were still in different stages of lockdown which impacted the results. 2.9% GDP is also a marked difference from the first quarter’s growth rate, which was recorded at 5.6%.
Weakening external demand is a factor – BNM
According to the statement from the central bank, the second quarter growth was adversely affected by the weakening external demand.
“Domestic demand remained the key driver of growth, supported by private consumption and investment,” said BNM.
Previously, BNM forecasted that Malaysia’s full-year growth will land somewhere between 4% to 5%.
However, some economists have pointed out that the target might be hard to reach as well, if domestic demand weakens.
“The weak external demand is expected to weigh on near-term growth. The economy is facing downside risks stemming from weaker-than-expected global growth, and a deeper or longer-than-expected technology downcycle,” Governor Abdul Rasheed Ghaffour told a news conference.
Global growth will be below average
While he does not expect a worldwide recession, the governor said global growth will be below the long-term average.
In a press conference, Dato’ Sri Dr. Mohd Uzir Mahidin, Chief Statistician of Malaysia said that the weaker growth in the second quarter of this year reflects the effects of the reopening of Malaysia’s economy in the second quarter of 2022.
“On the demand side, growth was supported by both private and public sector expenditures.
“Growth in overall investment improved, driven by capital expenditure on structures, and machinery & equipment (M&E), as well as improved Government’s fixed assets spending
“However, during this quarter, net exports registered a contraction due to the more challenging global environment,” said Dato’ Sri Dr. Mohd Uzir Mahidin.
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