Strong Q3 2022 GDP growth shows Malaysia on track to full economic recovery: Economists

KUALA LUMPUR: Malaysia’s strong third quarter (Q3) 2022 gross domestic product (GDP) print of 14.2 per cent growth year-on-year (y-o-y) shows that the economy is well on track towards full recovery, said economists.

Putra Business School associate professor Dr Ahmed Razman Abdul Latiff said the double-digit growth was anticipated but the 14.2 per cent number was a nice surprise.

“The percentage increase compared to Q2 was even higher than the percentage increase in 2019, pre-pandemic.

“If we look at the GDP value of RM383.8 billion, it is the highest in any quarter ever recorded,” he told Bernama.

He said the World Bank had predicted a moderated 4.2 per cent GDP growth for Malaysia in 2023 and the government has a similar target of around 4.0 per cent to 4.5 per cent.

“In my opinion, Malaysia will continue to register positive GDP growth in 2023 and could even reach 5.0 per cent provided we have a stable government after the 15th General Election.

“This could help weather multiple possible external global threats such as a global economic slowdown, continuing Russia-Ukraine crisis, US-China tariff war and global climate change,” he said.

Ahmed Razman elaborated that a stable government would be able to plan accordingly and take advantage of the government’s recent ratification of two of the largest free trade agreements, which are the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Meanwhile, the United Arab Emirates, Ministry of Human Resources and Emiratisation, chief labour economist cum advisor to the Minister, associate professor Dr Mohd Yusof Saari, said the strong GDP growth which was calculated on the basis of y-o-y was on the lower base comparison.

He stressed the need to look at the number from a quarter-on-quarter (q-o-q) growth basis, which is the growth of Q3 2022 compared with the growth of Q2 2022.

“This would make more sense as far as the economic recoveries are concerned compared to the y-o-y. We would like to know how the economy evolves during the recovery periods.

“Comparing 2021 and 2022 may not provide a good approximation because of the differences in the situations,” he said.

Mohd Yusof explained that by measuring the q-o-q basis, Q3 2022 growth was 1.9 per cent lower than the growth in Q2 2022, at 3.5 per cent, and the growth in Q2 2022 was lower than Q1 2022, which registered 3.8 per cent.

From the demand-side components, he noted the key expenditures that contributed to the positive growth of Q3 2022 GDP were private consumption, public consumption and exports.

For the case of private consumption, it expanded by 7.4 per cent compared to Q2 2022 which registered -0.7 per cent.

Public consumption patterns were also similar, expanding by 7.6 per cent in Q3 2022 compared to -1.7 per cent in Q2 2022, he said.

Therefore, he opined that the quarterly economic performance in Q3 2022 is growing but at a decreasing trend, attributed to the global economic environment that has affected the Malaysian economy.

Slow recovery from the impact of the Russia-Ukraine war, the domestic policies of the Chinese government, deepening inflationary pressures and the cost of living crisis for major trading partners are among the factors affecting Malaysia’s economic performance, Mohd Yusof said.

He believes that the relatively slow economic growth in Q3 2022, at 1.9 per cent compared to Q2 2022 on a q-o-q basis, was alarming and measures to stabilise growth should be taken into consideration.

“The slower growth also implies slower economic recoveries, particularly labour market recoveries. The unemployment rate reduced only by 0.1 percentage point from 3.8 per cent in June 2022 to 3.7 per cent in July 2022.

“If the global economy is slowing down in 2023, as projected by international agencies, this is expected to add additional pressure on the Malaysian economy,” he added. - Bernama

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