Malaysia sees 2022 economic growth exceeding expectations

MALAYSIA’S Finance Minister Zafrul Aziz is confident the economy will expand faster than expected in the current year, supported by strong private consumption amid risks from a global slowdown.

The economy, which expanded 8.9% in the second quarter, will likely see the momentum continue in the third quarter, he said at a Standard Chartered Bloomberg Live forum in Singapore. The central bank estimated full-year growth to be at the upper end of its 5.3%-6.3% forecast.

New estimates on growth will likely be announced during the annual budget next month, Zafrul said.

Aided by a boom in overseas trade, with both export and import values hitting records in June, Malaysia’s economy is among the best performers in the 10-country Association of South-East Asian Nations.

While the rebound is expected to support the government’s effort to wean the economy away from pandemic-era stimulus, risks to recovery remain in the form of high inflation and an imminent global slowdown. “We are facing various challenges including the strengthening dollar and a slowing global economy,” Zafrul said.

The weakness in the ringgit, which dropped to its lowest level since the 1998 Asian financial crisis last week, has raised the costs of some products in Malaysia, a net food importer. Consumer prices hit a 14-month high in July, with food inflation rising to a record. That prompted Bank Negara Malaysia to raise its policy rate for a third straight meeting on Thursday.

Even so, Zafrul said the ringgit has fared better than many other currencies such as the yen and the won, as well as the sterling, echoing an argument made by the nation’s central bank.

“This fixation to compare the ringgit with the US dollar must stop,” he said. –BLOOMBERG