Economic subsectors to continue expansion at a moderate pace in 2023, says BNM


BANK Negara Malaysia is projecting for most economic sectors to expand at a more moderate pace in 2023 amid the expectation of slower global growth and normalisation from the high growth recorded last year.

Broadly, the central bank said growth will be driven by continued expansion in consumer and tourism-related subsectors while export-oriented subsectors are expected to moderate in line with slower global growth.

Meanwhile, BNM said the easing of supply chain disruption and resolution of labour shortages will also lend support to all economic activities.

“Growth in the services sector is expected to be underpinned by consumer-and tourism-related activities amid further recovery in global tourism activity,” the central bank said in its Economic and Monetary Review 2022 (EMR 2022).

BNM said business-related services will remain supportive of growth, although at a slower pace, in line with the continued expansion in construction activity and external demand.

Furthermore, it said that sustained demand for data services, mainly in support of e-commerce and e-payment activities, is expected to provide further impetus to the information and communication subsectors.

BNM said growth of the manufacturing sector is expected to be moderate in 2023.

BNM said the electrical and electronics (E&E) cluster is projected to grow below its long-term average of 6.2% in tandem with the anticipated slowdown of global semiconductor sales.

It said that growth in the consumer-related manufacturing cluster is expected to be lower amid normalisation in household spending activities.

Meanwhile, the construction-related manufacturing cluster is forecasted to record a modest growth, supported by investment in structures, it said.

It said that the primary-related cluster is projected to expand at a faster pace, partly supported by the higher capacity utilisation at a major oil refinery in Johor.

Meanwhile, it said that the agriculture sector will be supported mainly by higher oil palm production, as labour supply improves.

Heavier rainfall in the early part of the year is also expected to improve soil moisture, thereby increasing oil palm yields in the later part of the year, BNM said.

Additionally, the central bank sid the gradual recovery in raw material supplies, especially fertiliser and animal feed, is anticipated to support growth in livestock and other agriculture subsectors.

Meanwhile, BNM said the mining sector growth is projected to moderate this year.

It said that the operationalisation of new facilities located in Peninsular Malaysia and higher production in existing oil and gas facilities, including the Block SK320 located in offshore East Malaysia, will provide support to growth.

“This will offset the loss of output from maintenance related closures in several facilities and maturing oil and gas fields,” it said.

BNM said the construction sector is expected to record a stronger growth in 2023, buoyed mainly by continued improvement in activities within the civil engineering and residential subsectors.

Faster progress of existing large transportation and utility projects will lift growth in the civil engineering subsector, it added.

Meanwhile, BNM said, higher new housing launches, in tandem with the expected expansion in demand following better income and employment prospects, will provide support to the residential subsector.