PETALING JAYA: The Malaysian economy is projected to grow by 4.5% in 2023, even as the World Bank warned about the global economy being “perilously close” to falling into recession this year.
In the first section of the 2023 Economic Report, the Finance Ministry said all economic sectors are expected to remain in the positive growth trajectory in 2023, driven by the services and manufacturing sectors.
Other sectors, namely agriculture, mining and construction - which remained below pre-pandemic levels as of 2022 - are also expected to grow further in line with the improvement in economic activities.
“However, downside risks such as prolonged geopolitical conflict, climate-related disasters and persistently high inflation are expected to further hamper the global economic growth, hence, affecting Malaysia's performance.
Overall, the nation’s gross domestic product (GDP) is forecast to grow approximately 4.5% in 2023,” the ministry said.
Earlier this month, Bank Negara said the economy could grow by 4% to 5% this year. In 2022, the GDP expanded by 8.7% - the strongest growth since 2000.
The growth in 2023 would be mainly supported by steady domestic demand primarily private expenditure as well as initiatives under Budget 2023 and development expenditure under the 12th Malaysia Plan 2021-2025.
“However, a slowdown in external demand is expected to moderate exports growth, particularly in the electrical and electronic products and major commodities,” the Finance Ministry said.
The ministry projects the local services sector’s GDP to expand by 5.3% in 2023, down from a growth of 10.9% last year.
Manufacturing growth was forecast at 3.9% this year, as compared to 8.1% in 2022.
It is noteworthy that last year’s strong growth rate was largely attributed to the low-base effect as the economy was still impacted by Covid-19-related restrictions in 2021.
The mining sector is also forecast to record a slower growth next year by 1.2%, as compared to 3.4% in 2022.
However, the agriculture and construction sectors are projected to witness stronger growth rates, at 1.1% and 6.1% respectively.
In 2022, the agriculture sector’s GDP grew by a mere 0.1% and the construction sector expanded by 5%.
Commenting on the global growth, the Finance Ministry said the world economy is expected to further soften in 2023 at 2.9%.
The global economy would be weighed down by persistent pressures such as inflation, tightening global financial conditions and economic deceleration among major economies.
