KUALA LUMPUR, July 6 — Economists have foreseen Malaysia's economic growth to moderate in the second half due to challenging external risks, reported Xinhua.
Hong Leong Investment Bank Research said in its recent report it expects Malaysia's economic growth to weaken in the second half, taking into consideration the absence of a low base effect, slower global growth and tighter financial conditions, and lingering geopolitical risks.
According to the research house, the weakness in exports in the first quarter portends further weakness for the economy for the rest of 2023.
However, it maintained Malaysia's 2023 gross domestic product (GDP) growth forecast at 4.5 per cent year-on-year, with private consumption remaining as the main driver of growth, albeit at a slower pace.
Malaysia's economy grew 5.6 per cent year-on-year in the first quarter, underpinned by resilient private consumption.
Last year, Malaysia's economy rose 8.7 per cent year-on-year. The official growth forecast for Malaysia this year is in the range of four to five per cent.
PublicInvest Research, which envisaged Malaysia registering a higher growth rate of 4.8 per cent in the first half, also anticipated Malaysia's growth to moderate to 3.9 per cent in the subsequent half of the year, as potential indicators suggesting a deceleration in activity.
While the research house has revised Malaysia's full-year GDP growth forecast higher to 4.3 per cent year-on-year, it said its forecasts face substantial downside risks.
Meanwhile, considering the external headwinds, global financial market uncertainties and further tightening monetary policy in many economies, MIDF Research has maintained its expectation of Malaysia's GDP growth to moderate to 4.2 per cent in 2023.
The softening growth is mainly due to the contraction of external trade performances as global demand is anticipated to be slower than the previous year.
On the back of higher interest rates, banking turmoil and elevated inflationary pressure, it said domestic demand in the United States and European Union will likely dampen in 2023.
Given rising downside risks from external factors, particularly concerns over weaker-than-expected export growth due to the global slowdown, Affin Hwang Investment Bank is also maintaining its projection that Malaysia's real GDP growth will likely be slower at 3.7 per cent in 2023.
However, it said growth in domestic demand will remain strong, supported by private consumption driven by low unemployment and improvement in tourism-related activities.
The research house also expects Malaysia's real GDP growth to expand and trend higher at 4.5 per cent in 2024. It believes that besides the higher allocation in development expenditure, other strategies and incentives will support the domestic economy if the external environment remains unfavourable for export growth.
— Bernama
