KUALA LUMPUR, Nov 10 ― Bank Islam Malaysia Bhd (BIMB) expects Malaysia’s gross domestic product (GDP) to expand by 13.3 per cent in the third quarter (Q3) this year compared with 8.9 per cent in the previous quarter (Q2).
Although the better-than-expected growth was primarily due to last year’s low base effect, the bank posited that growth would also be robust on a quarter-on-quarter (q-o-q) basis amid full economic reopening.
“We project another quarter of double-digit growth in private consumption of 19.5 per cent in Q3 versus 18.8 per cent in Q2 due to improvements in business conditions and consumer sentiment.
“Discretionary spending is healthy owing to fiscal intervention to keep inflation relatively benign while the domestic monetary environment remains accommodative,” the bank said in a statement today.
BIMB said private consumption and external trade would be the key drivers for growth in Q3.
Notwithstanding the continued supply-side constraints, it expected the labour market recovery to be encouraging, as evidenced by the declining unemployment rate and unemployment claims.
“We expect the trade balance to still be in Malaysia’s favour, although imports would continue to outpace exports in Q3 2022.
“Exports are poised to remain strong, supported by robust external demand, particularly in the electrical and electronics (E&E) manufacturing sector,” it said, citing the strong US dollar environment is a boon to Malaysia’s export sector.
The bank pointed out that despite the projected better-than-expected growth performance in Q3 2022, Malaysia’s growth momentum is expected to moderate in the fourth quarter due to the dissipating base effects.
Furthermore, the downside risks from the slowdown in external demand, global monetary tightening, and elevated commodity prices could weigh on domestic growth prospects in the coming quarter, it said.
“The recent downward revision of global growth by the International Monetary Fund (IMF), from 2.9 per cent to 2.7 per cent, does not help to improve the sentiments for Malaysia in 2023.
“We are pencilling in full-year 2022 growth to come in at 7.0 per cent amid the better-than-expected Q3 performance,” it said.
As for 2023, BIMB believed that Malaysia will be able to weather the storm amid economic reopening in China and the government’s ongoing reforms.
Bank Negara Malaysia is scheduled to release the Q3 GDP data tomorrow. ― Bernama
