Malaysia Could Wrap The Year With 7% Growth

Latest data on Malaysia continues to point to a robust economic recovery after poor 2021 growth of 3.1% affected by the Delta COVID wave. Retail sales rose 37% year on year in June and August. Private consumption accounted for c.113% of Q2 GDP growth (Malaysia – Accommodation to be scaled back further).

Revenge spending, early pension fund withdrawals, wages hikes amid a recovering labour market, and vehicle sales tax exemption were the main drivers. Loan growth since August has risen more than 6% y/y, driven by loans to the manufacturing sector, despite weakness in construction and real estate activity. The latter may be a function of labour supply which is expected to improve in the quarters ahead.

Industrial production data also points to strong external and domestic demand. Export-oriented industrial activity grew 12% in August, led by electronic production. This is despite weaker regional electronics activity. Meanwhile, domestic-oriented sectors rose 25% in August, partly boosted by low base effects. That said, accoridinng to Standard Chartered they are of view on a longer-term there may still be room for domestic industrial production to play catch up.

External demand for Malaysia’s exports remains strong. September exports rose 30%. On a volume basis, exports rose 10%. Malaysia’s external demand remains strong for both electronics and commodities, though we expect electronics demand to waver in the months ahead.

Looking ahead, a weak global growth outlook may result in external demand moderating for Malaysia’s external-oriented sectors. Nevertheless, the country may enjoy some tailwinds from the reopening of international borders. Tourist arrivals are
back to 50% of pre-COVID levels, with considerable room to recover. Meanwhile, domestic demand may continue to support growth in the quarters ahead

Previous articleIskandar Investment Alerts Public Of Telegram Scam Impersonating IIB Personnel
Next articleHartelega Quarterly Profits Drops 96% From RM1.15 Billion To RM37.3 Million


Please enter your comment!
Please enter your name here