Malaysia’s economic growth likely slowed by more than half to 6.6 percent in the fourth quarter of 2022 due to tepid consumption and softer global demand, a Reuters poll found.
Last month, Malaysia’s central bank unexpectedly kept its benchmark interest rate unchanged at 2.75 percent, signaling worries about economic growth, after four consecutive rate hikes last year.
The Feb. 2-7 poll of 21 economists predicted southeast Asia’s third-largest economy to have expanded 6.6 percent in the October-December quarter, down from the third quarter’s double-digit growth of 14.2 percent.
Forecasts for annual gross domestic product (GDP) growth, due to be released on Feb. 10, ranged from 5.2 percent to 10.5 percent.
Brian Tan, an economist at Barclays, whose Q4 forecast was for 8 percent growth, said the slowdown was likely due to an “unfavourable base effect and dissipating pent-up demand”. However, he said the figures were “still solid.”
Trade and economic activity in Q4 was also probably affected by China’s strict COVID-19 containment measures and a slowdown in global growth.
In December, China abandoned its three-year zero-COVID policy, which is likely to provide a significant boost to the Malaysian economy which is beginning to show signs of a slowdown.
China is Malaysia’s biggest trading and investment partner.
“Exports to China have been weak in Q4, which has dragged down overall growth. Although China’s recent easing of its zero-COVID policy is a bright spot, the initial transition period will be bumpy,” wrote Denise Cheok, an economist at Moody’s Analytics.
Some economists said the return of China’s tourists to Malaysia would have a positive impact on economic growth this year and next.
In 2019, tourism made up nearly 16 percent of the country’s GDP and accounted for around 25 percent of total employment.
A separate Reuters poll showed Malaysia’s growth to average 4.0 percent this year and then rise to 4.5 percent in 2024.