Malaysia’s Q1 GDP beats expectations as demand picks up | Business & Economy

Gross domestic product grew 5% in the January-March period, up from 3.6% in the previous quarter.

Malaysia’s economy grew more than expected in the first quarter, driven by a recovery in demand and a stronger labor market, Malaysia’s central bank said on Friday.

Gross domestic product (GDP) grew 5% in the January-March period, up from 3.6% in the previous quarter.

Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said the central bank had factored the Russia-Ukraine war in its forecast and growth in 2022 would be supported by continued expansion in domestic and foreign demand.

Downside risks include Russia’s invasion of Ukraine and China’s strict lockdown to stem the COVID-19 outbreak, as well as prolonged supply chain disruptions, Nor Shamsiah said.

“While downside risks on the global front have risen, we are confident in our growth trajectory and we do not see any risk of recession in Malaysia,” she told a news conference.

Bank Negara maintained its economic growth forecast for 2022 at 5.3-6.3%, downgrading it in March. Malaysia — which has seen some of the worst COVID-19 outbreaks in the region — lifted most of its coronavirus measures this month as infection rates slowed amid an increase in vaccination programs.

On Wednesday, the central bank unexpectedly raised its benchmark interest rate to 2 percent from a record low of 1.75 percent, citing a firmer domestic growth path and inflationary pressures from the conflict in Ukraine and disruptions to global supply chains.

“If the positive growth trajectory continues, barring any unexpected shocks, this is appropriate for MPC [Monetary Policy Committee] Further reduce the level of monetary easing,” she said.

Headline inflation is expected to average 2.2-3.2% this year, in line with BNM’s earlier estimate.

Deputy Governor Marzunisham Omar said that while there were price pressures, especially on food, inflation in Malaysia remained moderate compared to other countries.

“There is still some weakness in the economy. We have price controls on fuel and other food items that help ease price pressures,” Marzunisham said, adding that more long-term solutions were needed to control inflation.

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