PETALING JAYA: Malaysia’s economic growth, as measured by gross domestic product (GDP), will moderate to 4% in 2023 from the 8% estimated for 2022 – still streets ahead compared with the rest of the world, according to Maybank Investment Bank Bhd.
Its chief economist, Suhaimi Ilias, said the forecast for slower GDP growth mainly reflects the moderation in domestic demand on the back of slower expansion in private consumption.
“As the pent-up spending following full economic reopening last year dissipates, compounded by the effects of high inflation and high-interest rates on the cost of living and real disposable income, the outlook for public consumption growth moderates,” he said at a virtual media briefing on Maybank Investment Bank’s 2023 market outlook today.
Meanwhile, global economic growth in 2023 is set to moderate to 1.7% from just under 3% last year, mainly driven by expected stagnation or recession in major advanced economies, particularly the United States and Europe.
“What’s still holding the global economy after the strong rebound in 2021 is the outlook of improving China’s growth to 4% this year from our estimate of 3.3% last year, reflecting the impact from the unwinding of China’s zero-Covid-19 policy that will provide some support for the global and especially Asean economies,” Suhaimi explained.
Asean manufacturing activities are being impacted by global economic conditions. However, taking the cue from Singapore’s composite Purchasing Managers’ Index (PMI), the Asean economy remains in expansionary mode, albeit slower.
“This is supported by the services sector of the economy in line with economic reopening despite challenges being faced by the export-oriented manufacturing sector,” he observed.
Suhaimi said the downturn of the global economic outlook results in the slumping of exports and imports of goods and services in 2023.
“There is a high correlation between the global composite Purchasing Managers Index and global real GDP. Our view on moderating growth this year is corroborated by high-frequency indicators like manufacturing PMI which continue to drift lower in November (47.9) and the latest figure for December (47.8),” he said.
In addition, the investment bank said the ringgit is expected to end 2023 higher at 4.05 against the US dollar as sentiment leans positive. It also predicts Bank Negara Malaysia increasing the benchmark interest rate rate by 25 basis points this year to 3.0%, which will be the fifth consecutive hike since May 2022.