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Malaysia’s economy grows 5% in Q1 2022

GDP grew by 5% in the first quarter of 2022, compared to 3.6% in the preceding quarter.

According to Malaysia’s central bank, the economy grew faster than expected in the first quarter, buoyed by recovering demand and a healthier labour market. GDP grew by 5% in the first quarter of 2022, compared to 3.6% in the preceding quarter.

According to Bank Negara Malaysia (BNM) Governor Nor Shamsiah Mohd Yunus, the central bank has factored in the Russia-Ukraine war in its estimates, and the growth will be supported by ongoing development in domestic and external demand in 2022.

The downside risks include the continuing Russian invasion of Ukraine, a rigorous second series of lockdowns in China to combat the COVID breakouts, and long-term supply chain disruptions.

At a press conference held on May 13, Mohd Yunus said that the downside risks have risen on the global front, but Malaysia is confident in its growth trajectory and does not see a risk of any recession.

BNM kept its 2022 economic growth forecast at 5.3%-6.3%, which it had reduced in March. Malaysia, which has seen some of the region’s worst COVID-19 outbreaks, relaxed most of its coronavirus controls this month as infection rates slowed amid a ramped-up vaccination program.

On May 11, the central bank unexpectedly hiked its benchmark interest rate to 2% from 1.75%, citing a sharper domestic economic path as well as inflationary pressures from the Ukraine crisis and global supply chain disruptions.

In 2022, the headline inflation is expected to be 2.2-3.2%, unchanged from BNM’s previous forecast. While there are price pressures, particularly on food, Deputy Governor Marzunisham Omar stated that inflation in Malaysia is mild in comparison to other countries.

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