Malaysia's economy will slow in 2023

Amid difficult external circumstances and weakening domestic demand, the Malaysian economy would moderate in 2023, experts predicted on Thursday.

In a report, the Maybank Investment Bank Research predicted that Malaysia's full-year growth would reduce to 4% in 2023 from its projected 8% growth in 2022, primarily due to a slowdown in domestic demand, according to the Xinhua news agency.

The research firm anticipates slower growth in private consumption over the coming year as the effects of high inflation and high interest rates on living expenses and real disposable income evaporate and pent-up spending from the full economic re-opening fade.

Additionally, it anticipates a moderate growth in public consumption in keeping with the Budget 2023's decreased allocation for government operational expenses.

Furthermore, it claimed that slower global economic growth leads in a decline in exports and imports of products and services.

According to MIDF Research, Malaysia's gross domestic product (GDP) growth will reduce to 4.2% in 2023, primarily as a result of worse external trade results brought on by a slowing of global demand.

"We expect a slowdown rather than a recession in the global economy over the coming year. Demand conditions in the US and the EU will deteriorate next year as a result of higher interest rates and increased inflationary pressure, according to a forecast by MIDF Research.

The research firm estimates that Malaysia's real export growth will decelerate to 2.8% from a growth prediction of 12.5% for 2022, with increased services exports helping to some extent given the anticipation of a more robust tourism industry.

Though it predicts that the average prices of crude palm oil (CPO) and Brent crude oil will remain high for the coming year at 3,500 ringgit ($794) per tonne and $96 per barrel, respectively, it believes that Malaysia will continue to benefit from commodity exports, particularly palm oil, petroleum, and liquefied natural gas (LNG).

According to MIDF Research, the domestic economy of Malaysia will continue to be supported by strong consumer spending, increased tourism-related activity, and the resuscitation of infrastructure projects.

The Affin Hwang Investment Bank, on the other hand, claimed that the slowdown in global growth will have a detrimental influence on Malaysia's open economy. As a result, it recently decreased its 2023 GDP projections from 4.7% to 3.7%.

Malaysia would be impacted by the slowdown in global economy, but the research firm believes that a recession is improbable given the country's strong labor market and steadily improving tourism-related industries.

However, it cautioned that if the government made a serious commitment to bolstering its fiscal situation and resolving the concerns of sovereign rating agencies, Malaysia might have to deal with an increase in cost of living.