He agreed with deputy finance minister I Ahmad Maslan’s statement that Malaysia would stand by its own projection of 4%-5% GDP growth for this year.
The World Bank had, at its East Asia and Pacific October 2023 economic update briefing on Monday, stated that it was cutting its projection for Malaysia’s GDP growth from 4.3% to 3.9% due to “anaemic global growth and weak external demand”.
Barjoyai attributed the World Bank’s projection to inflation and recession brewing in the US and Europe, saying it was more pessimistic about growth towards the end of the year.
“Of course, our exports and imports have been declining quite rapidly. That is why we will be relying more on internal consumption and growth (in 2023),” he told FMT Business.
World Bank lead economist for Malaysia Apurva Sanghi also noted that Malaysia’s exports had contracted by 3.3% and 9.4% in the first and second quarters of this year respectively.
He said that apart from external factors, high base effects, lagging impact of rate hikes and extreme weather events on the domestic front had also put pressure on Malaysia’s growth.
Barjoyai noted that the Malaysian economy is dependent on consumption, which has been pushing its growth in the last three years.
“I think it will continue this year. (The growth) this year will be pushed more by public consumption (given that) private consumption is facing stunted (growth), but households have been more careful in their spending,” he said.
He also commended the government for maintaining its subsidies and support initiatives for the poor, saying that they will have a multiplier effect on the economy.
“Whatever the government distributes in the form of progressive wages, subsidies, and all assistance will be translated into purchases,” he said.
“They will immediately spend it (their money), and that will create demand in the market, followed by supply by producers, and also followed by increase in employment and purchases.”
However, another economist, Ramon Navaratnam, disagreed with Ahmad. He argued that the slowdown in Malaysia’s GDP growth was “less likely” due to the lack of positive signals worldwide.
Ramon urged the government to cut down on expenditures and plug leakages by stamping out corruption.