OCBC Bank revises Malaysia's 2022 GDP growth upwards to 6.9 pct

14/11/2022 06:56 PM

KUALA LUMPUR, Nov 14 (Bernama) -- OCBC Bank has revised its growth forecast for Malaysia’s gross domestic product (GDP) for 2022 to 6.9 per cent year-on-year (y-o-y) from 5.7 per cent previously.

It said the uptick is largely predicated on the third quarter (Q3) GDP outturn, which came in at 14.2 per cent y-o-y, compared to the bank’s expectation of 12.5 per cent, suggesting a further uptick in momentum for the rest of the year.

“The details from the latest GDP release signal that our concerns about consumption slowdown due to the relatively high household debt level and depletion of Employees’ Provident Fund statutory retirement funds may remain well within the gestation period and may not be manifesting clearly in the near term yet,” the bank said in its treasury research note today.

It said Malaysia’s growth had been supported by continued strength in the export sector.

“Even as we remain cautious of the potential headwinds posed by the global semiconductor sector’s slowdown, Malaysia’s external sector has seen robust outturn still, with the growth of 23.9 per cent y-o-y in Q3 compared to 10.4 per cent in the prior quarter,” it said.

OCBC opined that, taken together with the likelihood that inflation concerns might remain dominant in 2023, especially if subsidies are rationalised further, it saw a rising risk that Bank Negara Malaysia (BNM) might have more compulsion for rate hikes.

Set against the relatively strong economic backdrop, the bank forecasts BNM raising rates to 3.25 per cent in Q1 2023, instead of the earlier 3.0 per cent.

“BNM is thus likely to hike by 25 basis points each in the January and March 2023 meetings.

“We see BNM on pause thereafter, however. While the near-term growth looks rosy enough, Malaysia is unlikely to be unscathed in any sharp global slowdown that we may see in the coming year,” it added.

The bank also revised its 2023 growth outlook to 4.4 per cent y-o-y from 4.6 per cent previously.



Similarly, Standard Chartered Bank has raised its 2022 GDP growth forecast to 8.2 per cent from 7.0 per cent, with private consumption remaining the main growth driver.

It said the strong y-o-y print was partly boosted by base effects due to heavy COVID-19 restrictions in Q3 2021.

“That said, the economy continued to expand by 1.9 per cent quarter-on-quarter (seasonally adjusted), the fourth consecutive quarter of sequential increase,” it added.

Standard Chartered said the country’s total trade growth was strong in Q3, partly boosted by base effects.

It added that exports were driven not just by higher prices but also by volume growth.

“In particular, the electrical and electronics segment, as well as commodity exports, have been key drivers of export growth.

“While Malaysia exports have outperformed regional economies, export growth may have peaked and growth may moderate in the quarters ahead amid a global growth slowdown and a likely semiconductor downcycle,” it said.




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