KUALA LUMPUR, May 17 ― Research firms have maintained Malaysia's gross domestic product (GDP) projection of 5.6 per cent for 2022 with an upside to the economy following better performance in the first quarter (Q1) 2022.
In a note, Ambank Research said the upside to the economy would be underpinned by the continuous positive contribution from global semiconductors demand, firm commodity prices and export-led manufacturing activities.
The return of foreign workers to support the agriculture and construction sectors, and the 11,261 housing projects that were approved as at end-March 2022 would further provide a positive uplift to the economy going forward.
“Looking into the rest of 2022, the upside to the economy remains. However, the ongoing external challenges remain a concern.
“Besides external headwinds, on the domestic side, the economy is expected to experience some pressure from supply chain disruptions, rising cost and increasing living cost,” it said.
Meanwhile, CGS-CIMB said the strength in the Q1 recovery raises hopes for a robust Q2 2022 GDP ahead.
On the private consumption side, the large Employee Provident Fund (EPF) withdrawals, high commodity-related income, as well as continued recovery in the labour market, could point towards increased household spending.
“However, the risk of a global slowdown has increased amid rising uncertainty over the extent of China’s slowdown, the adverse impact of aggressive Federal Reserve rate hikes on the US economy, and lingering Russia-Ukraine crisis.
“Thus far, Q1 2022 GDP has been driven by domestic demand recovery, while export growth has moderated,” it added.
The research house expects Bank Negara Malaysia (BNM) to raise the overnight policy rate (OPR) twice, by 25 basis points each, in second half (2H) 2022 to end the year at 2.50 per cent, still below the neutral rate of 3.00 per cent. ― Bernama
