Bank Negara’s latest GDP report for Q3 indicated a 14.2% year on year while real GDP growth accelerated to 14.2% (Maybank IBG estimate: 14.8% YoY; consensus: 11.7% YoY; 2Q 2022: +8.9% YoY; 9M 2022: +9.3%). On a quarter i quarter the economy expanded by seasonally-adjusted +1.9% and non-SA +4.8%.
On monthly basis during the quarter, GDP grew by 15.8% in July 2022, 15.3% in Aug and 11.6% in Sep i.e. four months of double-digit growth including 16.5% in June. The real GDP growth for the quarter was broad-based i.e. faster growth in services benefitting from full economic opening that included international border opening, manufacturing and construction, plus rebounds in agriculture and mining.
Domestic demand double-digit growth momentum was sustained on further – albeit slower – double-digit expansion in private expenditure and pick up in public expenditure as private consumption double-digit growth eased, public consumption growth picked up and gross fixed capital formation growth accelerated n faster expansions in both private investment and public investment. Net external demand rebounded reflecting a larger pick up in exports of goods & services relative to imports of goods & services.
In view of the data, Maybank IB raised its 2022 and maintained its 2023 growth forecast, as it believes the economic growth will moderate in 4Q 2022 and 2023 given the current global economic downturn spearheaded by major economies and the dampening effect of “high inflation – high-interest rates”. Mitigating the downsides to the domestic growth outlook includes drawdown of household/individual excess savings and tourism recovery as buffers to consumer spending; investment growth momentum supported by robust approved FDI translating into rising actual FDI as well as on-going and new infrastructure – including digital and green – projects; and assumption of BNM raising OPR from “accommodative” to “neutral” rather than “restrictive” level to 3.00% by Jan 2023.
Near-term wildcard is the outcome of the 15th General Election on 19 Nov 2022 and implications on political stability and policy clarity – including on Budget 2023, implementation of development and infrastructure projects, and targeted fuel subsidy.
The bank raises the 2022 real GDP growth forecast to 8.0% from +6.0% (9M 2022: +9.3%; 2021: +3.1%) and for now, keeps the 2023 growth forecast at +4.0%
