KUALA LUMPUR, July 8 — OCBC Bank believes that Malaysia still stands a good chance to achieve a gross domestic product (GDP) growth of about 5.7 per cent year-on-year in 2022, despite the International Monetary Fund’s (IMF) plan to downgrade its global economic growth forecast for 2022.
“The saving grace is that the domestic consumption recovery for Malaysia has remained strong, especially because of the robust employment picture at this point,” its economist Wellian Wiranto told Bernama when contacted on Thursday.
Statistics released by the Department of Statistics Malaysia on Thursday showed that Malaysia’s unemployment rate for May 2022 was unchanged from April 2022’s 3.9 per cent.
According to Wellian, 2022’s economic growth would also be supported by commodities and semiconductor sectors which have been very helpful in bolstering Malaysia’s exports.
However, he cautioned that support from the price and volume in these two segments might not be as forthright as before in the coming quarters.
Reuters reported on Wednesday that IMF managing director Kristalina Georgieva said the IMF would downgrade its 2022 global GDP forecast of 3.6 per cent for the third time this year in the coming weeks and that IMF economists are still finalising the new numbers.
Earlier in May this year, the IMF was reported as saying that it was optimistic that Malaysia’s economy would expand 5.75 per cent in 2022, driven by pent-up domestic demand and continued strong external demand.
Commenting on Georgieva’s caution over the gloomy global economic outlook where she did not rule out a possible global recession next year due to the elevated risks, Wellian admitted that the risk of a global recession has picked up for sure.
“But as a baseline, we are still projecting more of a slowdown rather than a massive slump,” he said.
Asked if the rising COVID-19 cases in Malaysia would hamper the country’s economic growth forecast for 2022, Wellian said with COVID-19 cases on the rise, there are obvious risks that consumers could be a little phobic from previous years and pull back a tad on their spending.
“But overall, the transition to the endemic stage has proceeded fairly smoothly on the back of the high vaccination rate, so the impact on consumption should be muted.
“That should help to balance the external risks,” he said.
Malaysia recorded 3,561 new COVID- 19 infection cases on Wednesday, the highest number of daily cases registered since May 2022.