BNM: GDP expanded by 8.9% in 2Q 2022 amid improving domestic demand

The Malaysian economy registered a strong growth of 8.9% in the second quarter of 2022 (1Q 2022: 5.0%).

While growth was lifted to some extent by the low base from the Full Movement Control Order (FMCO) in June 2021, growth in April and May 2022 was particularly robust, underpinned by the continued recovery in labour market conditions and policy support.

The central Bank released the BNM Quarterly Bulletin today.

The improvement also reflected normalising economic activity as the country moved towards endemicity and reopened international borders.

Exports remain supported by strong demand for E&E products. In terms of economic activity, the services and manufacturing sectors continued to drive growth.

On a quarter-on-quarter seasonally-adjusted basis, the economy increased by 3.5% (1Q 2022: 3.8%).

Continued expansion in key economic sectors

Key economic sectors continued to expand in the second quarter of 2022.

The services sector grew by 12.0% (1Q 2022: 6.5%).

Consumer-related subsectors such as retail and leisure-related activities continued to recover amid the transition to endemicity, reopening of the international borders, improving labour market conditions and the additional support from policy assistance.

The strong expansion was also seen in business related activities including transport and storage, due in part to higher growth in air passenger traffic and tourist arrivals.

Furthermore, growth of the real estate subsector continued to improve as property transactions recovered. Additionally, the information and communication subsector provided further support to growth following greater usage of e-commerce services.

 The manufacturing sector expanded by 9.2% (1Q 2022: 6.6%), supported by both the export and domestic-oriented industries.

The effect of global supply disruptions was partly mitigated, as manufacturers were able to implement proactive measures to cushion the impact such as building inventory buffers through advance bookings and using alternative modes of transportation.

The E&E cluster continued to record double-digit growth driven by global demand for semiconductors.

The consumer cluster grew at a faster pace, supported by strong domestic spending activities. In particular, the motor vehicle and transport equipment segment ramped up production to meet order backlogs and fulfil demand as orders accelerated ahead of the expiration of Sales and Services Tax (SST) exemption on 30 June 2022.

However, growth in the primary-related cluster moderated as the production of selected pandemic-induced products such as rubber gloves continued to normalise. The construction sector grew by 2.4% (1Q 2022: -6.2%), its first positive growth since 2Q 2021.

Large commercial and industrial projects as well as small-scale projects continued to support activity in the non-residential and special trade subsectors.

Meanwhile, the slower progress in infrastructure projects led to subdued growth in the civil engineering subsector.

The mining sector recorded a smaller contraction of 0.5% (1Q 2022: -1.1%) amid closures of several oil and gas facilities for maintenance during the quarter.

Nevertheless, higher production from oil and gas fields such as the Pegaga gas field in Block SK320 located in offshore East Malaysia provided some support to growth.

The agriculture sector declined by 2.4% (1Q 2022: 0.1%). During the quarter, production in livestock and other agriculture subsectors were affected by rising input costs particularly for animal feed and fertiliser.

Growth was also weighed down by weak oil palm output as harvesting activity was hampered by prevailing labour shortages.

The BNM Quarterly Bulletin presents a quarterly review of Malaysia’s economic, monetary and financial developments.  It includes the Bank’s latest assessments on the direction of the economy going forward. The Bulletin also provides insights on current economic and financial issues, including highlights of policy initiatives undertaken by Bank Negara Malaysia in pursuit of its mandates.

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