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Businesses ‘neutral’ on 2H22 outlook, survey shows

This is as the group remains concerned about the external headwinds and domestic issues that will impact the pace of economic and business recovery in 2H22 and 2023

by ANIS HAZIM / pic by TMR FILE

THE business community is taking a neutral view of economic and business conditions for the second half of 2022 (2H22), while staying cautious on the outlook, the Malaysia’s Business and Economic Conditions Survey (M-BECS) showed.

The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Tan Sri Datuk Low Kian Chuan said most respondents remain concerned about the external headwinds and domestic issues that would impact the pace of economic and business recovery in 2H22 and 2023.

“The results of M-BECS for 1H22 and expectations for 2H22 indicated that while the economic recovery continues in 1H22 among the sectors, the business community is generally taking a neutral view about both economic and business conditions,” Low said at the M-BECS 1H22 and 2H22 presentation today.

This bi-annual survey, conducted by ACCCIM, was carried out from April 26 to June 30, and received 860 responses, of which small and medium enterprises made up 91.7% of total respondents.

Businesses are cautious about the external headwinds including the global stagflation due to soaring consumer inflation and increased cost of raw materials, the war in Ukraine, rising recession risks and higher US interest rates.

Domestically, the rising cost of raw materials, workers shortage, increased operating costs and the weakening ringgit are among the headwinds.

“Rising inflation and high cost of living are expected to slow down consumer spending somewhat and hence, impact on business sales revenue in 2H22,” he said.

Overall, a majority of respondents (65%) are “neutral” about the economic outlook in 2H22, 20.5% expect “better” while the remaining 14.5% perceive “worse” outlook.

ACCCIM Socio-Economic Research Centre ED Lee Heng Guie saw Malaysia’s economic recovery to continue in 1H22, albeit unevenly among economic sectors.

“Underpinning the recovery was the improvement in domestic demand and still buoyant exports,” Lee said.

He said 69.5% of respondents across most sectors reported that their sales have recovered or even higher compared to the pre-pandemic level at 56.5%.

Meanwhile, businesses’ cashflows and debtors’ conditions were largely unchanged in 1H22 though a higher percentage of respondents have experienced “worse” debtors’ conditions. 

“Moving into 2H22, a majority of them is cautious about business, cashflows and debtors’ conditions,” he noted.

Among the top factors that impacted businesses in 1H22 are increase in raw materials prices (61.6%), workers shortage (53.8%), high operating cost and cashflow (43.5%), the ringgit’s fluctuation (40%) and raw materials shortage (32.6%).

“However, overall production level has improved in 1H22 amid facing the shortage of workers and increased cost of raw materials,” he said.

Lee also maintained its GDP estimation of 5.2% for the year on the back of the country’s economy’s performance in the recent quarter. 

“I think based on the data we received in the second quarter of 2022 (2Q22), it is even better than the 1Q22. 

“But for 2H22, we have to look at all of these external events and domestic issues,” he added.

Zukri

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