Country’s key economic indicators continue to grow modestly in January 2023, despite the ongoing geopolitical conflicts and ratcheting up of inflation in the global economy.
The Malaysian Economic Statistics Review (MESR), Volume 3/2023, released by the Department of Statistics Malaysia (DOSM) today, stated looking into the monthly economic performance in January 2023 several key indicators showed positive growth as against the same month in 2022.
The Industrial Production Index (IPI) recorded a smaller increase of 1.8 per cent in January 2023 as compared to the same month of the preceding year. In line with this, sales of the manufacturing sector rose by 6.5 per cent to record RM148.0 billion in January 2023. In the meantime, Malaysia’s merchandise trade recorded an increase of 1.9 per cent in January 2023 to RM207.5 billion with increases in both exports and imports. The trade surplus declined by 2.1 per cent from the previous year to RM18.2 billion.
As for the price perspective, Malaysia’s inflation in January 2023 recorded a slower increase of 3.7 per cent as compared to 3.8 per cent in December 2022. For February 2023, inflation remained at 3.7 per cent. Similarly, the Producer Price Index (PPI) which measures the prices of goods at the factory gate inched up to 1.3 per cent in January 2023 against 3.5 per cent in December 2022. In February 2023, PPI slides 0.8 per cent. Following the sectorial performance in January 2023, the labour force situation continued to expand, reflected by the increase in the number of labour force during the month as against January 2022.
Based on the Global Economic Prospects report by the World Bank, global growth is expected to grow 1.7 per cent in 2023, due to synchronised policy tightening to control extremely high inflation, weakening financial conditions, and ongoing disruptions from Russia’s invasion of Ukraine.
The major trading partners of Malaysia like the United Kingdom’s (UK) GDP increased by 4.0 per cent in 2022 and climbed by 0.3 per cent month-on-month in January 2023. Meanwhile, China’s GDP decelerated to 3.0 per cent year-on-year in 2022 and the growth is anticipated to increase 4.3 per cent in 2023.
The economy recorded a sturdy growth of 8.7 per cent in 2022 as compared to 3.1 per cent in the previous year following the reopening of the country’s international borders starting on April 1, 2022 and the country’s transition to the endemic phase have supported the recovery of all economic sectors.
Natural rubber production fell by 39.3 per cent in January 2023 to 29,451 tonnes from 48,546 tonnes in the same month of 2022. While for oil palm fresh fruit bunches (FFB) production, Malaysia produced 6,590,125 tonnes in February 2023, an increase of 10.3 per cent as compared to February 2022 (5,974,154 tonnes).
On an annual basis, the Industrial Production Index (IPI) recorded a smaller increase of 1.8 per cent in January 2023 as compared to the same month of the preceding year. This was led by the lower output growth in the Manufacturing sector, 1.3 per cent and a decline of the Electricity output by 4.3 per cent. Meanwhile, Mining production expanded by 5.9 per cent.
The Manufacturing sector’s sales rose by 6.5 per cent year-on-year to record RM148.0 billion in January 2023. The growth was driven by the increase in Transport Equipment & Other Manufactures (14.0%) and Petroleum, Chemical, Rubber & Plastic Products (10.1%) sub-sectors.
Meanwhile, the Wholesale & Retail Trade’s sales amounted to RM135.1 billion in January 2023, with a growth of 12.4 per cent year-on-year. The increase was largely contributed by the Retail Trade sub-sector which rose 21.7 per cent to RM10.6 billion. This was followed by Motor Vehicles and Wholesale Trade which also grew by 20.1 per cent to RM15.2 billion and 3.1 per cent to RM60.4 billion, respectively.
Malaysia’s inflation in January 2023 recorded a slower increase of 3.7 per cent as compared to 3.8 per cent in December 2022. The growth in inflation was still driven by three main groups, namely Restaurants & Hotels (6.8%), Food & Non-Alcoholic Beverages (6.7%), and Transport (4.0%).
This was followed by a modest increase in Restaurants & Hotels; Furnishings, Household Equipment & Routine Household Maintenance; Recreation Services & Culture; Miscellaneous Goods & Services; Health; Housing, Water, Electricity, Gas & Other Fuels and Education. For February 2023, Malaysia’s inflation remained at 3.7 per cent.
Similarly, Malaysia’s Producer Price Index (PPI) which measures the prices of goods at the factory gate inched up to 1.3 per cent in January 2023 against 3.5 per cent in December 2022. The index of Manufacturing sector increased by 4.5 per cent (December 2022: 6.1%), followed by Water supply and Electricity & gas supply indices which increased by 3.8 per cent and 1.2 per cent, respectively.
In contrary, Agriculture, forestry & fishing sectors recorded a double-digit decrease of a negative 20.9 per cent in January 2023 (December 2022: -17.5%), trailed by Mining index with a negative 2.2 per cent decline (December 2022: 3.7%). In February 2023, PPI slides 0.8 per cent.
Looking at the external trade performances, Malaysia’s merchandise trade recorded an increase of 1.9 per cent in January 2023 to RM207.5 billion from RM203.6 billion over the same month of last year. Exports rose by 1.6 per cent to RM112.8 billion, while imports increased by 2.3 per cent to RM94.7 billion. The trade surplus declined by 2.1 per cent from the previous year to RM18.2 billion.
The review cited that Malaysia’s labour market showed an increase of 389.0 thousand persons in the number of labour force to 16.76 million persons as compared to the previous year (January 2022: 16.37 million persons).
Meanwhile, the LFPR increased by 0.7 percentage points to 69.8 per cent from 69.1 per cent in January 2022. The number of employed persons fell by 13.0 per cent or equivalent to 12.2 thousand persons (January 2022: 93.5 thousand persons) to 81.3 thousand persons while the unemployment rate stood at 3.6 per cent (January 2022: 4.2 per cent).
Malaysia’s Leading Index (LI) declined by 1.5 per cent to 108.5 points in January 2023 compared to 110.2 points in January 2022. Looking at the direction indicated by the decreasing growth rate of smoothed LI in January 2023, which remained below 100.0 points trend indicates that Malaysia’s near-term economic prospect will continue to face challenges. This is in line with the forecast by the International Monetary Fund (IMF) and the World Bank, which anticipated slower global economic growth in 2023.
