KUALA LUMPUR: OCBC Bank believes Malaysia is on track to achieve gross domestic product (GDP) growth of about 5.7% despite plans by the International Monetary Fund (IMF) to downgrade its global economic growth forecast for the year.
Citing strong domestic consumption recovery and robust employment, the bank’s economist Wellian Wiranto told Bernama that Malaysia is likely to still achieve the forecast 5.75% despite the IMF’s less than sunny outlook on the global economy.
He was commenting on a Reuters report on Wednesday quoting IMF managing director Kristalina Georgieva as saying that the IMF would downgrade its 2022 global GDP forecast of 3.6% for the third time this year. IMF’s economists are still finalising the new numbers.
The IMF had, in May, forecast that Malaysia’s economy would expand 5.75% this year, driven by pent-up domestic demand and continued strong external demand.
According to Wiranto, 2022’s economic growth would also be supported by the commodities and semiconductor sectors which have been very helpful in bolstering Malaysia’s exports.
However, he cautioned that support from the price and volume in these two segments might not be as strong in the coming quarters.
Wiranto did not discount the possibility of a global recession, in line with projections by Georgieva. The IMF head had cautioned over a gloomy global economic outlook and a possible global recession next year due to rising economic and geo-political risks.
“But as a baseline, we are still projecting more of a slowdown rather than a massive slump,” he said.
Asked if the rising Covid-19 infection in Malaysia would hamper the country’s economic growth forecast for 2022, Wiranto said consumers were likely to pull back slightly on their spending, driven by phobia over health risks.
“Overall, the transition to the endemic stage has proceeded fairly smoothly on the back of the high vaccination rate, so the impact on consumption should be muted,” he said.