KUALA LUMPUR: Malaysia's gross domestic product (GDP) expanded 14.2% year-on-year in the third quarter of the year, which was a stronger pace than what most economists predicted amid the country's continued recovery on strong domestic demand.
The growth in the country's third-quarter GDP beat the median forecast of 11.7% in a Reuters survey of economists and was up from 8.9% in the preceding quarter.
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In a statement, Bank Negara said the country's economy was underpinned by improvements in the labour market and income conditions as well as ongoing policy support.
Export, meanwhile, was supported by strong demand for electrical and electronic products, while inbound tourism recovered.
On a quarter-on-quarter seasonally adjusted basis, the economy grew 1.9%. Over the first three quarters of 2022, the economy expanded 9.3%
Looking ahead to the final quarter of the year, the central bank said the economy will continue to expand at a more moderate pace.
"The expected slower pace of growth reflects the more challenging global environment as well as absence of base effects.
"Nevertheless, growth for the whole year of 2022 is expected to remain robust given the strong outturns in the first three quarters of the year," it said.
Headline inflation is also expected to moderate but remain elevated in the fourth quarter of 2022. Overall, headline inflation is expected to 3.3% over the year.
Underlying inflation, as measured by core inflation, is expected to stay elevated for the remainder of 2022 given improving demand amid the high-cost environment.
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For 2023, Bank Negara expects the Malaysian economy to expand 4-5%.
"The Malaysian economy will continue to be supported by firm domestic demand amid continued improvements in the labour market.
"Growth would also benefit from the realisation of large infrastructure projects as well as higher tourist arrivals," said Bank Negara governor Tan Sr Nor Shamsiah.
However, she noted that the country's growth remains susceptible to weaker-than-expected global growth, higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions.
Bank Negara expects that headline and core inflation in 2023 will remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures.
"The balance of risk to the inflation outlook in 2023 is tilted to the upside and continues to be subject to domestic policy measures on subsidies, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions," said Nor Shamsiah.
