KUALA LUMPUR: Five out of seven economists believe the economy is on track to achieve between four and five per cent growth in 2023, after a stronger than expected 3.3 per cent growth in gross domestic product (GDP) in the third quarter (Q3) of 2023 pushed nine-month GDP to 3.9 per cent.
The 3.3 per cent growth is in line with the Department of Statistics Malaysia (DOSM) advanced data release and is higher than Q2. It was mainly held up by resilient domestic demand as exports remained soft amid prolonged weakness in external demand.
Household spending remained supported by continued growth in employment and wages. While, investment activity was underpinned by the progress of multi-year projects and capacity expansion by firms.
Sunway University economics professor Dr Yeah Kim Leng told Business Times the uptick in GDP growth in Q3 has eased fears of further slides in the domestic economy due to global headwinds. "The projected four to five per cent GDP growth is therefore within reach although it appears to be lower than the country's potential growth of 4.5-5.5 per cent. "The higher quarter-to-quarter quarterly growth also suggests a rising growth momentum that is expected to continue into the next quarter," said Yeah.
Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said the increase in Q3 2023 numbers is also due to increasing domestic consumption which can be partly explained by higher labour force recorded every month.
He also said the weakening of the ringgit encouraged foreign tourists to visit Malaysia and this helped to increase spending in the domestic market.
"It is possible to achieve the four per cent target for the year 2023 if Q4 GDP managed to register 4 per cent growth, which is not impossible," he said.
Echoing the views, Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid believes that the Malaysian economy has more room to grow.
He said this is due to the numbers of tourist arrivals that have yet to reach the pre pandemic levels and the technology sector is expected to improve in 2024. "All in all, I think this year's growth projection of four to five per cent is an attainable target. I think it may reach towards the low end of the projection in light of the external uncertainties," he said.
Citing different reasons, Universiti Tunku Abdul Rahman economics professor Wong Chin-Yoong believes that the growth in GDP number will be supported by strong domestic demand, more stimulus packages and better export numbers. "I believe we will arrive at this range of four to five (GDP growth target) but whether it is high or lower end, we need to wait for the October and November data to come out," Wong said. Universiti Kuala Lumpur Business School economic analyst Associate Professor Aimi Zulhazmi Abdul Rashid said the Q4 2023 GDP growth will be significantly driven by the current positive economic segments reflecting a healthy domestic economy, strong fundamentals, and good liquidity in the financial system.
Simultaneously, Aimi said if the manufacturing and mining as well as oil and gas (O&G) segments maintain similar growth, or only marginal changes compared with Q4, 2022; the economy is likely to hit four per cent growth for 2023.
Meanwhile, Malaysia University of Science and Technology economist Dr Geoffrey Williams told the Business Times said the economy is likely to chart growth a full year growth of about 3.7 per cent this year instead of the 4-5 per cent targeted by BNM.
"The annual GDP growth is 3.9 per cent so far this year and it will have to grow by 4.4 per cent in Q4 to be inside the four to five per cent growth range for the full year. "It is likely that growth will be below this level around 3.7 per cent for the full year," he said.
Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun also chose to err on the side of caution, highlighting BNM's cautionary statement on the "shaky" external environment. "So whether we could sustain this level of growth and as an export-oriented economy, this remains to be seen."I believe the projection will likely have to be revised down to three to four per cent or even two to three per cent," he added.