KUALA LUMPUR, Aug 18 — The economy expanded by 2.9 per cent in the second quarter (Q2) this year, supported by the improving labour market and continued increase in domestic demand and tourism activities, said the Statistics Department (DOSM).
Chief statistician Datuk Seri Mohd Uzir Mahidin said Malaysia’s economic growth moderated in Q2, partly due to weaker external demand amid the global technology cycle, lower commodity production and high base effect from Q2 2022, which recorded gross domestic product (GDP) growth of 8.9 per cent.
Malaysia posted a GDP growth of 5.6 per cent in Q1 2023, bringing the average growth for the first half of the year (H1 2023) to 4.25 per cent.
On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.5 per cent (Q1 2023: 0.9 per cent).
Bank Negara Malaysia (BNM) Governor Datuk Abdul Rasheed Ghaffour said the economy remains on track to achieve a growth of between 4 and 5 per cent this year, backed by the labour market’s continued recovery and rising tourism activity.
He said the Madani Economy will drive comprehensive restructuring.
Inflation
Speaking at a press conference here today, Rasheed said headline inflation is expected to be between 2.8 per cent and 3.8 per cent this year due to the moderation in core inflation and gradual subsidy rationalisation.
“Core inflation, while declining, remained elevated relative to its long-term average (2011-2019 average: 2 per cent),” he said.
He said non-core and core inflation had moderated, where fresh food and fuel contributed to the decline in non-core inflation, while the moderation in core inflation (Q2 2023: 3.4 per cent; Q1 2023: 3.9 per cent) was largely contributed by selected services.
These include food away from home, telephone and telefax services, and personal transport repair and maintenance.
“Inflation pervasiveness declined as the share of Consumer Price Index (CPI) items recording monthly price increases moderated to 42.7 per cent during the quarter (1Q 2023: 56 per cent), below the second quarter long-term average (2011-2019) of 43.9 per cent.
“Notably, inflation pervasiveness dropped in June after a transitory uptick in May following the festive season,” Abdul Rasheed said.
As for H2 2023, both headline and core inflation are projected to trend lower within expectations, partly due to the higher base in H2 2022.
But he noted risks to the inflation outlook are subject to domestic policy shifts on subsidies and price controls, as well as global commodity prices and financial market developments.
Outlook
BNM said economic growth will continue to be supported by domestic demand amid improving employment and income as well as the implementation of multi-year projects.
Tourist arrivals are expected to continue rising, which would support tourism-related activities.
“Risks to Malaysia’s growth outlook are subject to downside risk stemming primarily from weaker-than-expected global growth.
“There are, however, upside risk factors such as stronger-than-expected tourism activity and quicker implementation of projects,” Rasheed said.
— Bernama
