S&P Global expects Malaysia's economy to grow at 3.2% in 2023

KUALA LUMPUR: Malaysia's economic growth is expected to ease to 3.2 per cent this year, following the strong growth of 8.7 per cent in 2022, said S&P Global Ratings (S&P).

Its Asia-Pacific economist, Vishrut Rana said the downtrend reflects external weaknesses as the global trade and electronics industry cycle softens this year, after two years of strong growth and activity.

"On the domestic demand side, we expect some of the re-opening momentum in consumer spending to ease as households have drawn down their savings, which will mean a moderately slower consumption growth this year.

"Looking further out, we expect a strong upward growth of 4.5 per cent over our forecast horizon as trade and electronics activities recover, alongside steady domestic demand growth,” he told Bernama.

Meanwhile, Vishrut said that inflation would be more contained in Malaysia compared to global developments, partly due to fuel subsidies.

He added that S&P expects to see one interest rate increase from Bank Negara Malaysia this year, and remains cautious about monetary policy transmission in the economy as inflation expectations are anchored.

"Credit conditions had tightened briefly in January but current credit conditions in Malaysia appear to be benign and broadly sheltered from global banking sector developments,” Vishrut said. - Bernama