KUALA LUMPUR: Malaysia's gross domestic product (GDP) is projected to expand 4.0-5.0 per cent in 2023 driven by firm domestic demand, said Bank Negara Malaysia governor Tan Sri Nor Shamsiah Mohd Yunus said.
The central bank, Nor Shamsiah said, was on track to achieve the target anchored by firm domestic demand amid a challenging global environment.
"Risks to the growth outlook are fairly balanced. Downside risks are emanating primarily from external developments, while there are upside risks mainly from domestic factors such as stronger-than-expected tourism activity and the implementation of projects," she told a press conference after announcing the first quarter (1Q 2023) GDP performance here today.
Economists agree that Malaysia's economy is progressing towards meeting Bank Negara's projected GDP growth.
Redvest Wealth and Asset Management chief investment officer Julian Suresh Sundaram said the target was achievable as there was little to indicate that domestic factors would turn lower given continued strong domestic spending amid a healthy labour market.
Sundaram said Bank Negara's projection for tourist arrival, at 20 million this year, was on the conservative side supporting the potential for an upside surprise.
"The US Federal Reserve's pausing aggressive rate hikes will also be supportive to global financial conditions providing a further lift to investment sentiments and reduce external vulnerabilities," he told the New Straits Times.
Sundaram said the lessening of global drag along with a weaker ringgit and expected continued upturn in China growth would support the external sector and provide a further boost to the economy.
He said inflation was also expected to moderate lower and support real growth and reduce consumption uncertainties.
"Better growth and a healthy financial market will also support credit growth and again be positive for the economy. The question here would be would the economy surprise on the upside rather than on the downside," he said.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said the GDP target was still achievable provided that every quarterly growth remained above four per cent.
Ahmed Razman said if the quarter GDP value remained the same for Q1 and Q2 2023, the four per cent growth cannot be achieved. So there must be significant growth in terms of GDP value from Q3.
"Even though the global economy growth will be slowing down around two per cent this year, Bank Negara's target is still achievable.
"This is due to continuous demand on the electrical and electronic (E&E) products as well as high oil price that stubbornly remains at above US$70 dollar throughout this year," he said.
UCSI University Malaysia assistant professor and Centre for Market Education research fellow Liew Chee Yoong thinks the growth target can be achieved considering the domestic demand driving the economy.
However, Liew said it was important that the government continued to implement policies which support sustainable economic growth.
"The government should also implement structural reforms which may help stimulate economic growth such as measures which include deregulation, labour market reforms, and trade liberalisation," he said.