UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the latest GDP figures in Malaysia.

Key Takeaways

“Real GDP growth improved further to 8.9% y/y (1Q22: +5.0%) which was ahead of Bloomberg consensus (7.0%) but below ours (9.5%). On a seasonally adjusted quarter-on-quarter basis, real GDP rose by 3.5% (1Q22: +3.8%).”

“Key sectors of growth include services (12.0%), manufacturing (9.2%), and construction (2.4%), while agriculture (-2.4%) and mining (-0.5%) contracted. Domestic demand was the main contributor to overall GDP owing to further lift from private consumption (18.3%), private investments (6.3%), and government spending (2.8%).”

“Despite multiple external headwinds, we remain positive on the economic outlook in 2H22 with low base effects and the country’s ongoing transition into endemicity. Nevertheless, the pace of growth is expected to soften as the one-off cash aid from EPF withdrawals wane, effect of higher inflation and interest rates, as well as heightened external risks. Given the strong GDP print of 6.9% in 1H22, we upgrade our full-year GDP estimate to 6.5% for 2022 (vs. 5.5% previously, BNM est: 5.3%-6.3%). We maintain our forecast of 4.8% for 2023.”