GDP growth up 5% with domestic demand

GDP grew faster in 1QCY22 with strong domestic demand and a rise in exportations. Malaysia’s economic growth strengthened further as the real GDP expanded faster at +5.0%yoy in 1QCY22 (4QCY21: +3.6%yoy).

MIDF says the growth was largely higher than their expectations and market hopes. On a quarter-to-quarter basis, Malaysia’s seasonally adjusted GDP grew by +3.9%qoq (4QCY21: +4.6%qoq).

The sustained domestic growth shows that the resurgence of Covid-19 cases due to the Omicron variant had little impact on the economy as consumption by both public and private sectors strengthened in 1QCY22.

Domestic demand strengthened further

Looking at GDP by demand side, the pick-up in private consumption (+5.5%yoy) was the major contributor to stronger growth in 1QCY22.

This reflects that consumers took the opportunity to increase travels and spending activities following the relaxation of Covid-19 restrictions. The stronger private consumption contributed +3.4%-point to GDP growth.

Stronger growth – improved spending

On the supply side, approximately 75% of the growth during the quarter was contributed by the stronger growth in the services sector (share: 57.5% of GDP).

The services sector growth jumped to +6.5%yoy (4QCY21: +3.2%yoy), the fastest growth in 3 quarters. Meanwhile, manufacturing sector also sustained positive growth but moderated to +6.6%yoy (4QCY21: +9.1%yoy), supported by double-digit growth in E&E sub-sector.

GDP forecast at 6%

The macroeconomic outlook is expected to improve further from 2Q onwards as we expect the further relaxation of SOPs and reopening of international borders will support a continued pick-up in domestic economic activities.

“Sustained growth in exports will be another factor to support growth this year. Following the economic reopening, we maintain our projection that GDP growth in 2022 will strengthen to +6% (2021: +3.1%).”