KUALA LUMPUR, May 9 — Malaysia’s gross domestic product (GDP) growth for the first quarter of 2023 (1Q 2023) is expected to record 5.6 per cent versus five per cent in last year’s corresponding quarter, said Bank Islam Malaysia Bhd (BIMB).
Such compelling growth in 1Q 2023 is bolstered by strong domestic demand coupled with moderating inflation amid facing external headwinds, the bank said in a research note today.
BIMB chief economist Firdaos Rosli said private consumption would remain the mainstay of the demand growth in the quarter, supported by a steady improvement in the labour market where a lower unemployment rate of 3.5 per cent was registered in February.
“Higher tourism receipts and the long end of the 2022 academic year holidays helped. As such, we believe that private consumption growth in the said quarter will likely come in the high single digits,” he said.
The bank noted that following 4.5 million tourist arrivals recorded in the fourth quarter of 2022, tourism arrivals and receipts could grow higher in 1Q 2023, coupled with China’s economic reopening which is lending a hand in the growth of the services sector.
The financial services sector could register good growth amid the rate pause, together with government services and wholesale and retail sectors taking the lead in spurring performance in the quarter, it said.
Furthermore, the bank opined that the double-digit figure in vehicle sales during 1Q 2023, spurred by the extension of the sales tax exemption period and new entry-model launches, could possibly help the economy off to a good start in the year.
Hence, BIMB has maintained its 2023 GDP forecast at 4.5 per cent for the time being, in line with the projections of multilateral development banks which range between 4.5 per cent and 4.7 per cent.
“External demand for Malaysian exports dropped as recessionary fears manifest amid sticky inflation and the high-interest rate environment in advanced economies.
“However, the latest Purchasing Managers’ Index shows resilience in the country’s manufacturing activity, displaying an upward trend of late (48.8 points in April versus 46.5 points in January),” it said.
Additionally, the bank would expect upside risks to its growth projections stemming from positive trade and investment spillovers from China’s economic reopening and Malaysia’s solid labour market, which might counterbalance growth headwinds in the second half of 2023.
— Bernama
