KUALA LUMPUR: Malaysia's macroeconomic outlook is expected to improve further from the second quarter of 2022, amid uncertainties from the ongoing war in Ukraine, disruptions in the global supply chain, concerns of slowdown in China and high inflation.
Analysts at MIDF Research said the expected relaxation of standard operating procedure (SOPs) and reopening of international borders would support a continued pick-up in domestic economic activities.
"Sustained growth in exports will be another factor to support growth this year," the firm said.
Malaysia's real gross domestic product (GDP) expanded faster at 5.0 per cent year-on-year (yoy) in the first quarter of 2022, versus a contraction of 0.5 per cent in Q1 2021.
This is generally comparable with GDP growth in Indonesia, which expanded 5.01 per cent during the same quarter, and the Philippines' 8.3 per cent expansion.
The Philippines government was targeting 7.0- 9.0 per cent growth in 2022, before slowing to 6.0 in 2023 and rising again to 7.0 in 2024, according to Affin Hwang Capital.
Affin Hwang also noted that the impact of the geopolitical tensions and China's return to lockdown might drag exports in countries across Asean in near term.
MIDF Research, meanwhile, said Malaysia's 5.0 per cent growth was largely higher than the firm's and market expectations.
The firm has maintained its 2022 GDP forecast at six per cent.
"Following economic reopening, we maintain our projection that GDP growth in 2022 will strengthen to 6.0 per cent from 3.1 per cent in 2021," it said.
On a quarter-to-quarter basis, the firm said Malaysia's seasonally adjusted GDP grew by 3.9 per cent.
"The sustained growth shows that the resurgence of Covid-19 cases due to the Omicron variant had little impact on the economy as consumption by both public and private sectors strengthened in the first quarter CY22," it said.
Looking at GDP by demand side, MIDF Research said the pick-up in private consumption was the major contributor to stronger growth in the first quarter CY22.
This reflects consumers taking the opportunity to increase travels and spending activities following the relaxation of Covid-19 restrictions,.
"The stronger private consumption contributed 3.4 per cent point to GDP growth. Other demand component that contributed strongly was real exports (8.0 per cent yoy), mainly underpinned by strong demand for electrical and electronics," it said.
On the supply side, MIDF Research said about 75 per cent of the growth during the quarter was contributed by the stronger growth in the services sector (57.5 per cent share of the GDP).
"The services sector growth jumped to 6.5 per cent yoy, the fastest growth in three quarters."
The manufacturing sector also sustained positive growth but moderated to 6.6 per cent yoy, supported by double-digit growth in E&E sub-sector, the firm said.