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Malaysia's economy continues to grow amid rising price pressure - MIDF Research

01/07/2022 05:21 PM

KUALA LUMPUR, July 1 (Bernama) -- Activities in Malaysia's economy continued to grow amid rising price pressure, said MIDF Research.

In its latest monthly economic review, the research firm maintained its growth projection for Malaysia's gross domestic product (GDP) at six per cent on the back of economic reopening and the absence of strict movement control.

“Moving into the endemic phase, further relaxation of COVID-19 restrictions including the reopening of international borders will allow activities in the domestic economy to continue growing going into the latter half of the year,” it said.

MIDF said as domestic demand strengthened, core inflation surged to an almost five-year high, rising by +2.4 per cent year-on-year (yoy), the fastest gain since August 2017. 

“The continuous upward trend in core Consumer Price Index (CPI) indicates the underlying price pressures from surging domestic demand, underpinned by improving labour market conditions and domestic reopening effects,” it said.

It said the leading index (LI) signals improving growth momentum as the country registered improvement with a slower decline of -0.5 per cent yoy in April 2022 (March: -1.4 per cent yoy). 

“The slower decline points to better growth prospects for Malaysia’s economy in the near term. 

“It is more encouraging that the current economic condition in Malaysia continued to show improvement, with the coincident index (CI) growing faster at +5.3 per cent yoy (March 2022: +3.1 per cent yoy), the fastest expansion in 11 months,” it said.

The research house expects further reopening of the economy and resumption of business operations will result in continued improvement in domestic economic activities. 

Meanwhile, MIDF noted that the exports grew stronger than expected in May 2022 at +30.5 per cent yoy in May 2022, supported by increased shipments to regional countries and stronger re-exports (May 2022: +79.1 per cent yoy; Apr 2022: +16.8 per cent yoy). 

The imports growth grew even faster at +37.3 per cent yoy in May 2022 (Apr 2022: +22.1 per cent yoy) on the back of continued improvement in domestic economic activities and high commodity prices.

“Malaysia will also benefit from growing external demand for electric and electronics (E&E) and commodities, particularly palm oil and petroleum products,” it said. 

Nevertheless, MIDF noted that it is still cautious about external developments which could affect the country’s economic outlook. 

“These include downside risks such as global inflation risk, the slowdown in China and the global economy, prolonged disruption in the global supply chain, the ongoing war in Ukraine and more hawkish stance of central banks,” it added.




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