Thailand
Malaysia’s economy to grow up to 6.3% in 2022
KUALA LUMPUR: The Malaysian economy is expected to improve further, with growth projected to be between 5.3% and 6.3% in 2022.
In 2021, Malaysia’s gross domestic product expanded by 3.1%.
According to Bank Negara’s Economic and Monetary Review 2021 released today, the economic recovery is underpinned by the continued expansion in external demand, full upliftment of containment measures, reopening of international borders, and further Improvement in labour market conditions.
In addition, the implementation of investment projects and targeted policy measures will provide further support to economic activity and aggregate demand.
The central bank also said in 2022, PPP-weighted global growth and Malaysia’s export-weighted global growth are projected to expand between 3.8% and 4.3%, and between 4.0% and 4.5%, respectively.
The improvement in labour market conditions amid the progressive reopening of economies over the past year is expected to facilitate recovery in private sector activity in 2022.
The impact of resurgences of Covid-19 remains a key risk but is expected to be smaller in 2022 than in 2020 and 2021 due to factors such as continued good progress in vaccinations, among others.
Nevertheless, it said the ongoing military conflict in Ukraine is expected to weigh on global growth.
Spillovers would stem mainly from disruptions in commodity supply, leading to higher commodity prices and inflation which could raise cost pressures on firms and lower real income for households.
The central bank said global inflation is projected to rise and remain elevated in 2022, driven by higher energy and commodity prices and ongoing disruptions in the global supply chain in an environment of sustained demand recovery.
Amid continued strength in inflationary pressures globally, a further normalisation of monetary policy is anticipated in 2022 for most central banks in both AEs and EMEs.
Nonetheless, the pace and magnitude of monetary policy normalisation remain uncertain, as they depend largely on the persistence of inflationary pressures and the strength of the recovery in the economy and labour market.
It noted that the balance of risks to global growth remains tilted to the downside, amid heightened geopolitical tensions and continued uncertainties surrounding Covid-19.
The main risk to growth arises from a potential reimposition of strict containment measures in the event of a Covid-19 resurgence due to severe and vaccine-resistant Variants of Concern (VOCs).
This could result in higher and more persistent inflation, which extreme weather conditions and disruptions in the production of commodities could exacerbate.
Downside risks also arise from slower-than-expected recovery in China and worsening geopolitical conflicts, particularly if the conflict in Ukraine continues to escalate further and is prolonged, or if trade and financial sanctions are intensified.
Moreover, tighter global financial conditions risk sharp capital outflows, which could lead to disorderly exchange rate adjustments and the unwinding of prevailing financial sector imbalances.
Nevertheless, there are upside risks to global growth, arising from a faster and wider rollout of Covid-19 vaccines, new treatment options for Covid-19 infections, and additional fiscal support particularly in AEs.
Bank Negara said as economic activity picks up, the unemployment rate is expected to decline further in 2022 to around 4% of the labour force.
The recovery in the labour market will be further supported by targeted measures to boost labour demand, facilitate re-skilling and up-skilling and reduce labour market frictions.
A sustained recovery in employment and income is expected to drive an improvement in household spending.
Additionally, progress in vaccinations and upliftment of containment measures will lead to an improvement in consumer confidence and some materialisation of pent-up demand.
As a result, private consumption is expected to grow by 9.0% (2021:1.9%). Private investment is also expected to recover, growing by 5.3% (2021:2.6%), supported by the continued expansion in global demand and the implementation of new and ongoing investment projects.
Source: https://www.thestar.com.my/business/business-news/2022/03/30/malaysia039s-economy-to-grow-up-to-63-in-2022