Slower economic growth expected for Malaysia

KUALA LUMPUR – Malaysia’s economic growth momentum is expected to be slower, said The Department of Statistics Malaysia (DOSM).

Using the Leading Index (LI), a predictive tool used for predicting economic upturns and downturns for an average of four to six months ahead, the DOSM said the country’s economic growth will be slower due to geopolitical conflict.

As of now, the DOSM said the LI remained above 100.0 points, standing at 110.1 points in January 2022, with the year-on-year LI rising by 0.02%. This rise is mainly caused by the number of new companies registered.

“The growth outlook is in line with the full reopening of international borders as the country transitions into the endemic phase, alongside the implementation of the new minimum wage of RM1,500, both of which are expected to increase consumption and support domestic demand.

“However, the (Russia-Ukraine) geopolitical conflict and lockdown of China’s major cities impose downside risks to the economic prospect if both incidents are prolonged,” said chief statistician, Datuk Seri Dr Mohd Uzir Mahidin in a statement recently.

For month-on-month (m-o-m), he added that the LI declined by 1.2% compared to the 0.5% recorded in December 2021. This was mainly due to the decrease of semi-conductor imports by 0.6% and number of housing units approved by 0.5%.

Aside from that, DOSM said that the wide spread of the COVID-19 Omicron variant is not expected to significantly impact the country’s gross domestic product (GDP) growth.

The department added that the Coincident Index (CI) for January 2022 showed growth by 5.5% y-o-y to 117.4 points from 111.3 points in January last year. Furthermore, it was also 2.5% higher m-o-m compared to December 2021’s 114.5 points.

The growth in CI was driven by the rise in capacity utilisation in the manufacturing sector (2.7%), volume index of retail trade (0.2%) and real contributions to the Employees Provident Fund (0.1%).

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