Malaysia: Economy expanded more than expected in 2022 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the publication of the GDP results in Malaysia.

Key Takeaways

“Malaysia’s real GDP growth moderated to 7.0% y/y in 4Q22 (3Q22: 14.2%) as low base effects wane. However, growth surpassed ours (6.3%) and Bloomberg consensus (6.7%), as well as the long-term average (5.1%). On a seasonally adjusted basis, real GDP contracted 2.6% q/q (3Q22: +1.9% q/q) which marks the first decline in five quarters as support from stimulus effects wane. Full-year GDP growth came in at 8.7% for 2022 (vs 3.1% in 2021) which was higher than our estimate of 8.6% and the official forecast (6.5%-7.0%).”

“Growth uplift in 4Q22 was mainly attributed to robust private consumption and steady rise in investments. All sectors expanded with strong support from services, mining and construction. Domestic demand was the key driver of growth while net exports provided further support because of slower imports relative to exports. This helped to widen the current account surplus to MYR25.7bn (or 5.5% of GDP) in 4Q22, marking the highest quarterly surplus since 3Q20.”

“BNM reiterated they do not expect a recession this year. We concur and remain cautiously optimistic and maintain our 2023 GDP growth forecast of 4.0% (official est: 4.0%-5.0%). More restrictive global monetary policy settings, potential escalation of geopolitical tensions, weaker-than-expected global demand, ongoing global tech down cycle, and domestic policy changes are key downside risks to the country’s economic outlook ahead, while being weighed down by high year-ago base effects.”