He said the International Monetary Fund (IMF) and the World Bank had forecast slower global economic growth this year. The IMF had revised the growth rate estimate to 3.6% from 4.4% in January, while the World Bank’s figures are 3.2% against 4.1% in January.
“The Russia-Ukraine conflict, which has dragged into its third month, has disrupted the global supply chain as well as resulted in increasing crude oil and commodity prices, which will put pressure on rising inflation,” said Mustapa, Bernama reported.
Steps taken by China to tighten movement restrictions to curb Covid-19 would also influence export demand as the republic is Malaysia’s main trading partner.
“In fact, the monetary policy uncertainties of some developed countries will also influence capital market flows,” he said.
Mustapa, a minister in the prime minister’s department, has responsibility for economic affairs.
He said the government would continue to strengthen efforts to accelerate economic reforms and structural transformation, strengthen its fiscal position, encourage domestic private investment and strengthen civil service delivery, especially in reducing bureaucracy and facilitating business matters.
“Besides that, the government will also intensify activities to raise the country’s food security to ensure price stability and to curb rising prices of goods,” he said.
Mustapa said the economy returned to a stronger footing in the first quarter of 2022 with a Gross Domestic Product growth rate of 5%, exceeding the expectations of most economic analysts.
Foreign investments almost tripled to RM24.4 billion compared to RM8.5 billion for the corresponding period last year, or about half of the RM48.1 billion in incoming investment for the whole of 2021.
He said the labour market was recovering. Unemployment had declined to 4.1% and the number of unemployed persons had dropped to 671,200, the lowest level since mid-2020.
Mustapa said Malaysia’s economic performance is expected to remain strong in the second quarter.
“The reopening of borders is expected to revive tourism and related industries including aviation, accommodation and hospitality. The government is expecting two million foreign tourist arrivals this year, which is projected to contribute RM8.6 billion to the country’s economy,” he added.
Tengku Zafrul says growth spurt a result of 2022 Budget
The first-quarter growth was a result of initiatives of the expansionary 2022 federal budget as well as the spillover effects from the 2021 budget and previous stimulus and assistance packages, finance minister Tengku Zafrul Aziz said.
He said there was increased business and consumer optimism, reflected in strong manufacturing sales which increased by 13.9% to RM144.6 billion in March and wholesale and retail trade sales which rose 9.8% to RM123.8 billion.
He said foreign investment had increased, and was directed towards manufacturing, financial, insurance and takaful activities, and wholesale and retail trade. The investment was mostly from Switzerland, the United States, Hong Kong, and Japan.
He said the economy was on track to meet the 2022 GDP growth forecast of 5.3% to 6.3%.