KUALA LUMPUR: Malaysia's gross domestic product (GDP) grew 5.6% in the first quarter of 2023 (1Q23), driven higher by domestic demand.
The result was above the expectation of a Reuters survey of economists, which had a median forecast of 4.8% growth for the quarter.
On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 0.9%.
For the first quarter of the year, Bank Negara reported that private consumption spending was supported by further improvement in the labour market, with strong growth in employment and continued expansion in wages.
Investment activity in the country was underpinned by capacity expansion and continued implementation of multi-year projects.
Meanwhile, inbound tourism continued to recover, lifting services exports and partially offsetting the slower goods export growth.
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On its 2023 outlook, Bank Negara said the Malaysian economy is projected to expand 4% to 5%, driven by firm domestic demand.
Improving employment and income as well as continued implementation of multi-year projects would support consumption and investment activity.
Moreover, higher inbound tourism activity would lift high-touch services industries, it said.
“Risks to Malaysia’s growth outlook are relatively balanced. Upside risks stem mainly from domestic factors.
"These include stronger-than-expected tourism activity and implementation of projects including those from the re-tabled Budget 2023.
"Meanwhile, downside risks could emanate from lower exports due to weaker-than-expected global growth and more volatile global financial market conditions,” said Bank Negara governor Tan Sri Nor Shamsiah Mohd Yunus in a statement.
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Bank Negara said it expects headline and core inflation to moderate, but remain avove the historical average, in 2023.
It said the moderation reflects lower global cost factors amid easing supply chain disruptions and lower commodity prices.
However, the central bank also expects core inflation to remain at elevated levels amid firm demand conditions.
"Existing price controls and fuel subsidies will continue to partly contain the extent of upward inflationary pressures.
"The balance of risk to the inflation outlook is tilted to the upside and remains highly subject to any changes in domestic policy, financial market developments and global commodity prices," said Nor Shamsiah.
