The Southeast Asian country is continuing a strong recovery from the pandemic after reopening its borders in April.
Malaysia’s economy grew at its fastest annual pace in a year in the second quarter, driven by expanding domestic demand and resilient exports, but a slowdown in global growth is likely to threaten the outlook for the remainder of 2022.
Gross domestic product (GDP) rose 8.9 percent year-on-year in April-June, the central bank said. That was faster than the 6.7 percent growth forecast in a Reuters poll and higher than the previous quarter’s 5 percent annual increase.
It was also faster than any annual rate since the second quarter of 2021, when GDP was 16.1 percent higher than a low year-ago base.
Seasonally adjusted GDP for April-June rose 3.5 percent from the previous three months, when quarterly growth was 3.8 percent.
Malaysia’s economy has been on a strong recovery path since the country reopened its borders in April.
“Looking forward, the economy is expected to continue to recover in the second half of 2022, albeit at a more moderate pace in the face of global headwinds,” Central Bank of Malaysia Governor Nor Shamsiah Mohd Yunus said at a news conference.
Growth for full-year 2022 is expected to come in at the upper end of the previously forecast range of 5.3 percent to 6.3 percent, Nor Shamsiah said.
Headline and core inflation were expected to be higher on average in 2022, although Nor Shamsiah said any adjustments to the overnight rate would be measured and gradual to avoid stronger action in the future.
The central bank raised interest rates for the second straight meeting in July.
Capital Economics said in a note it expects Malaysia’s economic growth to slow in the coming quarters as commodity prices eased and the boost from reopening borders faded.
“However, the slowdown is likely to be relatively mild as the reopening of the international border will provide adequate support for activities,” said Gareth Leather, the group’s senior Asia economist.
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