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While global economies are battling steep inflation and slowing growth, recently released Malaysia GDP growth figures paint a very different picture for the Southeast Asian economy. Malaysia reported a growth of 14.2% during the July-September quarter, much higher than the 11.7% GDP growth forecast by a Reuters poll.
The double-digit quarterly growth surpassed the previous quarter’s GDP growth of 8.9%. It was also the fastest growth on record after the second quarter of 2021 when the Malaysian economy expanded by 16.1% coming out of Covid-induced closures.
Where is Malaysia’s GDP headed?
The sudden implosion of growth in Malaysia GDP has been attributed to rising exports and domestic demand. Malaysia’s central bank governor in a briefing on Friday said he sees full-year growth to exceed the government’s 7% mark but said that the economy will expand at the previously estimated rate of 4%-5% in 2023.
The Malaysian government had last month revised its economic growth guidance for the full year 2022 to 6.5%-7% from 5.3%-6.3% but saw growth slowing for FY2023.
“We acknowledge there are still some spots in our economy that have yet to return to pre-pandemic condition,” central bank governor Nor Shamsiah Yunus said during the media briefing. “The moderation in global growth will particularly have an impact on Malaysia’s exports.”
Yunus said that Malaysia GDP in the third quarter saw a better-than-expected performance on the back of rising domestic demand, solid exports, policy support and a recovery in the labour market.
Export growth in Malaysia has seen back-to-back surprises, with the country posting double-digit export growth for the past 14 months. Malaysia’s exports rose to a record high in June 2022 and posted a 30.1% growth in September 2022.
The country’s unemployment rate fell to 3.6% in September, compared to 4.8% in August last year. These figures could be instrumental in deciding the outcome of the upcoming 2022 general election.
However, it is likely Malaysia has reached the peak of such exemplary GDP growth. “Over the coming quarters, we expect that tightening monetary conditions, fading base effects and pent-up demand, as well as a slowing global growth environment will weigh on Malaysia’s economic growth momentum,” Fitch Solutions said in a note. The agency sees Malaysia growing at 4% in FY2023 but upped its FY2022 forecast to 8.4% from its previous 5.9%.
