Malaysia’s economy grew in double digits for the first time in over a year in the third quarter, boosted by strong domestic consumption and robust exports, according to a Reuters poll, but the outlook ahead was clouded by risks of a global slowdown.
In September, Malaysia posted a trade surplus of $6.7 billion, the largest in over two decades as exports saw strong double-digit growth of 30.1%, led by higher shipments of electronics, oil and gas products amid high prices.
The Nov. 1-8 poll of 22 economists predicted the economy expanded 11.7% in the July-September quarter compared with the same period a year earlier. In the previous quarter, the economic grew 8.9%.
“A low statistical base from the third quarter of 2021, when the economy was in lockdown, will contribute towards an elevated year-on-year GDP growth reading for Q3 2022,” said Shivaan Tandon, emerging Asia economist at Capital Economics.
“The reopening of international borders should help to ease labour shortages in certain sectors and also drive a continued recovery in the tourism sector. However, the boost is likely to be offset by drags from elsewhere, with tighter monetary policy, slower employment and wage growth alongside weaker external demand.”
In its latest budget estimates the Malaysian government upgraded growth forecasts for this year to 6.5%-7.0% from 5.3%-6.3% but expected growth for 2023 to slow to 4.0%-5.0%.
Trade and economic activity was also likely to be affected by China’s strict COVID-19 containment measures and a slowdown in global growth.
A separate Reuters poll showed Malaysia’s growth would average 7.2% this year and then fall to 4.2% in 2023.
Malaysia’s ringgit has underperformed this year, affecting inflation, despite the central bank steadily hiking interest rates to “preemptively” manage price pressures, albeit in increments of 25 basis points, amid a strengthening U.S. dollar.
“The currency is likely to remain under downward pressure until U.S. bond yields peak and market participants remain risk averse amid elevated levels of global economic uncertainty,” added Tandon.