World Bank Upwardly Modifies Malaysia’s 2022 GDP Growth Forecast
Revision of up to 6.4% for Malaysia’s 2022 GDP Estimates
Malaysia’s 2022 GDP is looking better, according to the World Bank, the global partnership is helping countries in their economic expansion. The international organisation initially forecast Malaysia’s gross domestic product (GDP) growth at 5.5%. However, an upward revision of this projection now pegs the GDP growth at 6.4% for 2022.
The World Bank ascribes this to an increase in Malaysia’s economic activity from January to the end of June 2022. Data from this period shows tremendous activity and expansion. The numbers are far above initial and previous forecast expectations. As such, the World Bank’s upward revision of the GDP growth forecast for 2022 became viable.
Malaysia’s increase in activity and subsequent economic expansion is the result of rises in several sectors. These include export growth and domestic consumption in commodities, electrical and electronics, construction, services, manufacturing, and tourism. A 5.8% growth in public and private sector investments and an 18.3% increase in private consumption also help. Expectations of a continuation of this impetus were high at the recent World Bank East Asia and Pacific Economic Update.
A Heightening of Economic Activity
According to the World Bank, last year’s data indicates a 4.5% economic contraction and a third-quarter low base. Economically, this will be beneficial for Malaysia moving forward. This difference in estimates will show up positively in contrast to this year’s third-quarter growth.
Domestic consumption and export growth continues to drive Malaysia’s 2022 GDP development forecast. The second quarter’s domestic demands remain a substantial contributing factor. Minimum wage increases and labour market improvements are the main reasons behind the robust activity in this sector. Another supporting component is financial withdrawals from Malaysia’s EPF or Employees’ Provident Fund.
However, the World Bank does caution against over-dependence on private consumption and domestic demand. Upheavals to this ecosystem would slow the growth momentum during the year’s second half. A safer economic route to stability would be to enhance investments, including developing sustainable FDIs (foreign direct investments).
Staying Resilient in Global Uncertainties
Several factors have the potential to impede Malaysia’s 2022 GDP growth potential. These include rising domestic inflation and possible labour shortages on a national front. On a more global platform, there are economic uncertainties, such as China’s sluggish economy and the war in Ukraine.
However, the World Bank is confident in Malaysia’s robust fundamentals, including its position as a key commodities player. This is excellent news for entrepreneurs and investors looking to trade in the Malaysian business ecosystem.
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