KUALA LUMPUR: Malaysia’s economic growth, measured by gross domestic product (GDP), is likely to grow at 5.4 per cent for 2022 from the 5.0 per cent initial forecast, said OCBC Bank.
OCBC Bank made the revised forecast after considering the consumption propensity and still-supportive exports environment.
Its economist Wellian Wiranto said the overall fourth quarter (Q4) data in 2021 shown a relatively solid footing, putting the annual growth rate at 3.1 per cent – near the bottom-end of the official 3.0 per cent to 4.0 per cent forecast – compared to the 5.6 per cent contraction of 2020.
“Still, as Bank Negara Malaysia often points out, the risks to growth do remain tilted to the downside.
“From how global growth might turn weaker to supply chain disruptions and virus upticks, the central bank continued to strike a conservative tone,” he said in the latest report today.
He said the risk to the economy might be coming from the ‘premature withdrawal’ of monetary policy support.
Nevertheless, he said the central bank would likely continue its task of supporting growth for as long as it can, notwithstanding the better-than-expected GDP print today.
On the domestic front, even though inflation may edge up this year, he said it is unlikely to spurt up, which was happening in the developed countries.
On the external front, he said Malaysia might be less impacted by the dramatic development surrounding rate hikes by the Federal Reserve, given the country’s continued status of being in a current account surplus and hence less beholden to foreign fund flows.
Meanwhile, he said the central bank might not hurry to increase the rate and maintain its Overnight Policy Rate.
“Overall, we see the baseline prospect of Bank Negara adopting a rate hike, but only in the third quarter, once growth momentum consolidates further.
“The degree of the hike will be relatively mild at just one hike of 25 basis points,” he added.
