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Malaysia's macroeconomic stability solidifies the growth outlook - Economist

July 12, 2023
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KUALA LUMPUR, July 11 (Bernama) -- Growth stability is attributable to solid consumption and strong investment flows and Malaysia is one of the Asean countries driving regional growth, said an economist. 

Juwai IQI global chief economist Shan Saeed said global investors are making strategic allocations of funds where the economic confidence is high, growth momentum is strong and above all policy stability bolsters Gross Domestic Product trajectory. 

He said Malaysia provides better infrastructure for global companies which prefer efficiency and reliability. 

“Malaysia has among the best infrastructures in terms of roads, railroads, ports and highways. 

Malaysian ports such as Port Klang and Port of Tanjung Pelepas are ranked among the top 20 busiest ports globally. 

“We also observed that global companies like Intel, Huawei, Tesla and Airbus are making investments in Malaysia due to its productive labour force and adoption of technological innovation,” he told Bernama. 

Sharing this view, Putra Business School Associate Professor Ahmed Razman Abdul Latiff said Malaysia has performed considerably well among Asean nations for the past few years in terms of managing the inflation rate to the minimum level and the current Overnight Policy Rate is considered to be accommodative enough to allow room for economic growth this year. 

“The country also managed to attract foreign direct investments (FDIs) annually with an increasing trend due to the availability of good infrastructure, skilled workers and a stable unity government. 

“The weakening ringgit meanwhile made FDIs into Malaysia more attractive while also attracting more tourists into the country,” he said. 

Nevertheless, he noted that challenges remained as the global economic growth is slowing down and affecting export and import growth. 

Therefore, the implementation of the current economic policies must continue to maintain momentum and to ensure resilience of the nation's economic activities, he added. 

Earlier, in a virtual media briefing, the Asean+3 Macroeconomic Research Office (AMRO) maintained its short-term growth forecast for the Asean+3 region at 4.6 per cent this year, up from 3.2 per cent last year. 

At the same time, AMRO said the growth forecast for Asean has been revised downward to 4.5 per cent from 4.9 per cent in April, reflecting the impact of weaker external demand on Singapore and Vietnam. 

Growth is expected to be higher at 5.3 per cent in 2024. It also pointed out that Asean+3’s recovery is now riding on resilient demand within the region. 

“Recovering labour markets and falling inflation, along with steadily growing intra-regional tourism, are helping to cushion growth against sluggish external demand that is dampening the region’s exports,” it noted. 

AMRO also shared that Malaysia’s economic growth is projected to hit 4.2 per cent in 2023, an expected moderation after registering a strong growth of 8.7 per cent last year. 

The forecast, it said, would indicate the country’s growth potential at a more sustainable level despite expanding at a slower pace. 

“Malaysia is a major manufacturing exporter and is now facing headwinds from the weakening demand in  Europe and the United States.

“Although the manufacturing exports are not doing as well, domestic spending, fortunately, is holding up well to support growth,” it added.