Malaysia’s economy ‘no longer in crisis’ as return of tourists buoys growth

Friday, May 12, 2023

Malaysia’s economy grew 5.1 per cent between January and March, the central bank said on Friday, as a rebound in domestic consumption and tourism continued to free the economy from the malaise caused by the pandemic.

Full year growth remains on track for between 4-5 per cent, especially if Malaysia attracts its expected 20 million visitors, Bank Negara Malaysia (BNM) Governor Nor Shamsiah Mohd Yunus told reporters.

The economy is no longer in crisis and has, in fact, continued to gain strength, Nor Shamsiah said.

Headline inflation is expected to track between 2.3 and 3.8 per cent, the governor added.

Exports, however, softened in the first quarter in line with worldwide trends of slowing demand amid expectations of a global economic downturn, partly driven by Russia’s invasion of Ukraine, and easing demand from top trading partner China, according to analysts.

Growth in the Southeast Asian nation was widely expected to moderate this year following the record 8.7 per cent pace in 2022, as most of the world fully reopened their borders after two years of strict movement curbs to stem the spread of COVID-19.

That was Malaysia’s best annual performance since 2000, when the economy expanded by 8.9 per cent as it recovered from the Asian financial crisis.

Experts say Malaysia may be set for a significant boost in trade and investments from China moving forward after securing about 170 billion ringgit (US$38.6 billion) in investment commitments during Prime Minister Anwar Ibrahim’s maiden visit to Beijing.

Nor Shamsiah said any decision to adjust the central bank’s monetary policy will depend on prevailing domestic and global developments.

There are many things happening at the global stage, be it price pressures, growth or geopolitical uncertainties.

Depending on how these things turn out, it may have an impact on the domestic economy, she said.

The central bank unexpectedly raised its overnight policy rate by 25 basis points to 3.00 per cent last week, citing the need to normalise monetary accommodation as the economy was resilient and to manage persistent inflation.

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