Malaysian economy to grow between 4-5% in 2023

KUALA LUMPUR: The Malaysian economy is expected to grow between 4% and 5% in 2023, underpinned by firm domestic demand amid external headwinds.

Further improvements in the employment and income level, as well as continued implementation of existing and new multi-year projects will underpin household spending and investment activities, said Bank Negara Malaysia Governor Tan Sri Nor Shamsiah Mohd Yunus.

“Higher tourism activities from rising tourists' arrival is projected to leave growth in high touch services and sectors that were impacted during the pandemic,” she said at the launch of BNM's Annual Report 2022, and on Wednesday (March 29).

The central bank's forecast compares with the 4.5% GDP growth assumption by the Ministry of Finance in its revised 2023 Economic and Fiscal Outlook report released in February.

At the press conference, Nor Shamsiah said that while the risk to Malaysia's growth outlook is balanced, the downside risk for growth remains in the form of external headwinds.

“This includes a sharp tightening in global financial market conditions, further escalation of geopolitical conflicts, and extreme weather events. Higher than expected domestic inflation and input costs could weigh on the growth outlook” she added.

The unemployment rate is expected to average at 3.5% and drop steadily over 2023 to the pre-pandemic level of 3.3% by year end, she added.

“At 3.3% the economy will technically be at full employment,” the governor added.

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Source : The Edge Markets

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