Kuala Lumpur: The Malaysian economy grew 8.7% in 2022, the highest recorded in 22 years, according to Bank Negara Malaysia (BNM).
The growth was driven mostly by, among others, the continued expansion in domestic demand, a recovery in the tourism sector and a steady improvement in employment.
The economy registered a 7% growth in the fourth quarter of 2022 (4Q 2022), underpinned by the continued expansion in domestic demand, especially for electrical and electronics goods.
BNM said headline inflation stood at 3.3% while core inflation was at 3% during the year.
It said growth in 2023 would be supported by domestic demand amid the global slowdown but Malaysia would not go into recession.
However, it said, the economy was still subject to risks related to weaker-than-expected global growth and a further escalation of geopolitical tensions.
Other challenges include the re-emergence of significant supply chain disruptions, more persistent inflation that would make it necessary to tighten monetary policy as well as a higher risk aversion in the global financial markets.
The central bank said growth in 4Q 2022 was mostly supported by the continued expansion in domestic demand, sustained labour market recovery, resilient demand for E&E products and recovery in tourism activities.
However, it said there was waning support from stimulus measures and low base effects, leading to a moderation in the growth compared with 3Q 2022.
The current balance in 4Q stood at RM25.7 billion, which is 5.5% of GDP, due to larger moderation in imports. However, the services deficit narrowed thanks to a further recovery in tourism activities.
Malaysia also saw an increase in foreign direct investments (FDIs). There was a net inflow of RM12.3 billion that came with the injections of funds by foreign investors in the manufacturing and non-financial services subsectors, particularly in communications. These came mainly from the US, Switzerland and Singapore.
The total net FDI inflow amounted to RM73.3 billion, an increase of RM21.1 billion compared to last year.
BNM said while challenges remain at the global level, domestic demand would remain the key driver of growth, supported by recovery in the labour market.
An updated forecast for growth this year will be announced when Budget 2023 is retabled on Feb 24.
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