Categories: Economic News

Malaysia’s economy could slow down in the fourth quarter, according to the finance minister

The fourth quarter will be “challenging” for Malaysia’s economy if global headwinds such as Russia’s war in Ukraine and China’s zero-Covid policy persist, Finance Minister Zafrul Aziz said.

China is Malaysia’s largest trading partner, and disruptions to supply chains and trade “will dampen some of the growth expectations in the fourth quarter of this year for Malaysia,” he said.

Maybank Investment Banking Group shared a similar view.

The bank expects rising inflation and interest rates at home and around the world, along with signs of a slowdown in major economies such as the US, Europe and China, to start having a “visible impact” in the country’s economy from the fourth quarter. , said Maybank IBG Group Chief Economist Suhaimi Ilias.

Growth momentum from July to September should be strong, but that could be the result of a negative base effect from the same period a year earlier, Zafrul said.

Malaysia’s gross domestic product contracted in the third quarter of 2021 by 4.5% as a result of the slowdown in all major economic sectors, mainly manufacturing and service industries, the Department of Statistics Malaysia reported.

Suhaimi said Maybank IBG expects another quarter of mid- to high-digit growth in the third quarter, around 7.5%, partly due to the low base of the previous year when the economy contracted

Despite the challenges ahead, Zafrul said he is confident that Malaysia’s economic growth throughout the year will meet the government’s forecast.

“I’m still very optimistic that we will get to the projected GDP number of between 5.3 and 6.3% … Probably at the top of that 6.3%,” he told “Squawk Box Asia” on Monday ” from CNBC.

On Friday, Malaysia’s central bank announced that the country’s economy grew by 8.9% in April to June from a year earlier.

This was driven by stronger domestic consumption and tourism spending after Malaysia fully reopened its international borders in April, Zafrul said.

“Domestic consumption has been strong, much stronger than we expected,” he said.

Retail spending in June rose 44% year-on-year, as the government’s fiscal stimulus packages and pent-up demand from the pandemic have boosted consumer spending, Zafrul said.


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