By Ying Xian Wong
Malaysia’s finance ministry on Friday raised its forecast for economic growth this year, citing strong performance in the first half and the effects of ongoing government stimulus.
The ministry revised its 2022 forecast for gross domestic product growth to 6.5%-7.0%, up from 5.3%-6.3% previously. It highlighted growth of 6.9% in the first half that was helped by the reopening of the economy, robust exports and strong domestic demand, and said a job creation initiative, financing package to support recovery of businesses and cash assistance for lower-income groups had helped boost the economy.
For next year, the ministry forecast economic growth of 4.0%-5.0%. It expects pent-up global demand to fade amid prolonged geopolitical tensions and monetary policy tightening, with a moderation in major commodity prices also weighing on growth.
“Malaysia’s economy has recovered from the Covid-19 pandemic,” it said in its annual fiscal outlook report, while cautioning that “the global environment remains uncertain as geopolitical tension persist and growth is expected to slow.”
The ministry also unveiled a 372.34 billion ringgit ($80.29 billion) budget for 2023 and said it expects the government’s fiscal deficit to fall to 5.5% from an estimated 5.8% in 2022.
It decreased its allocation for subsidies next year “following the expected moderation in commodity prices and gradual move towards [a] targeted subsidy approach,” it said. The ministry expects revenue collection to fall in 2023, largely due to lower dividends from government entities.
Malaysia’s economy contracted 5.6% in 2020 due to starkly decreased economic activity amid the pandemic. It recovered somewhat in 2021, posting growth of 3.1%.
Write to Ying Xian Wong at yingxian.wong@wsj.com
