Malaysia’s GDP Growth at Moderate 4% in 2023

After the strong rebound in 2022, the World Bank sees growth in Malaysia, the Philippines, and Vietnam moderating as the growth of exports to major markets slows. In the Bank’s latest Global Economic Prospects report released on Tuesday, Jan 10, growth is projected at 4% in Malaysia, 5.4% in the Philippines, and 6.3% in Vietnam. It said that in Indonesia, GDP is projected to grow by 4.9% on average in 2023-24, only slightly slower than in 2022, reflecting softening but still robust private spending.

The World Bank said that after a strong rebound in 2021, growth in the East Asia and Pacific (EAP) region slowed markedly in 2022 to an estimated 3.2%, 1.2 percentage point below previous forecasts.

Source: https://www.financialexpress.com

It said the slowdown was almost entirely due to China (which accounts for about 85% of the region’s GDP), where growth slowed sharply to 2.7%, 1.6 percentage points lower than projected in June. The bank said the country faced recurrent Covid-19 outbreaks and mobility restrictions, unprecedented droughts, and prolonged stress in the property sector, all of which restrained consumption, food and energy production, and residential investment. Fiscal and monetary policy support for domestic demand and an easing of restrictions on the real estate sector have only partially offset these headwinds.

In the region excluding China, the pace of growth more than doubled, rising to 5.6% in 2022. The report said activity was supported by a release of pent-up demand as many countries continued to lift pandemic-related mobility restrictions and travel bans. Growth in the region excluding China in 2022 was 0.8 percentage point above the June forecast, reflecting upgrades for Malaysia, the Philippines, Thailand, and Vietnam, most of which also benefited from a strong rebound of goods exports. The World Bank also said consumer price inflation increased across the region in 2022.

Growth in the EAP region is projected to firm to 4.3% in 2023 as easing of pandemic-related restrictions allows activity in China to gradually recover. These projections are below those of last June, where regional growth was expected to surpass 5% in 2023-24. The downward revisions are broad-based and reflect Covid-related disruptions and protracted weakness in the real estate sector in China and weaker-than-expected goods export growth across the region. Inflation is also expected to ease somewhat after peaking in 2022.

It is expected that global GDP growth is only 1.7% in 2023.  This is the slowest pace outside the 2009 and 2020 recessions and since 1993. In its previous Global Economic Prospects report (June 2022), the bank had forecast 2023 global growth at 3%.

Global growth in 2024 is expected to pick up to 2.7% — below the 2.9% estimate for 2022 — and average growth for the 2020-2024 period would be under 2% — the slowest five-year pace since 1960.

Nevertheless, the new Unity Government and the Economics Minister in particular must draw-up good plans to meet the headwinds already expected – some of which are our own creation. Reduce labour shortage, improve exchange rate, reduce red tapes for FDIs and DDIs and increase food supply/security are some of the key measures to overcome possible negative developments in the global economy.

Reference:

Malaysia’s GDP growth to moderate to 4% in 2023, says World Bank, Surin Murugiah, theEdgemarkets.com, 12/1/23