KUALA LUMPUR, Aug 12 — The stellar gross domestic product (GDP) growth of 8.9 per cent in the second quarter (Q2 2022), which brought GDP growth in the first half of the year (H1 2022) to 6.9 per cent, suggests an "equally strong third quarter growth,” said Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz.

"Economic growth momentum is expected to remain strong in the third quarter, driven by encouraging performance in foreign trade and tourism,” he said in a statement today.

As such, he said the government is confident the Malaysian economy can achieve the official 2022 GDP growth projection of 5.3 per cent to 6.3 per cent.

Tengku Zafrul said Malaysia’s economy has continued its recovery momentum, as the 8.9 per cent growth in the second quarter had exceeded the 5 per cent expansion in the first quarter and outperformed the economic performance of several developed and regional countries, including China (0.4 per cent), the United States (1.6 per cent), European Union (4.0 per cent) and Singapore (4.4 per cent).

Tengku Zafrul attributed the strong Q2 performance to the expansionary fiscal policy through Budget 2022, positive spillovers from the financial aid and economic stimulus packages and Budget 2021, as well as a monetary policy that has remained accommodative.

He said the Q2 growth was also mainly supported by the 18.3 per cent growth in private consumption (against 5.5 per cent growth in Q1 2022) due to the full reopening of the economy and international borders.

Nonetheless, he said the government remains cautious on the second half of year performance, "as the economic outlook is still subjected to risks of slower growth due to global economic uncertainty, caused primarily by the prolonged Russia-Ukraine conflict, as well as China’s economic slowdown following the implementation of strict Covid-19 containment measures.”

"Furthermore, higher inflationary pressures due to expected increases in commodity and food prices, as well as ongoing global supply chain disruptions, are factors that may impact global growth,” he added.

In another development, Tengku Zafrul said the Finance Ministry (MOF) is currently preparing Budget 2023 through consultations and engagements with various stakeholders, with priorities including more sustainable subsidy management, economic reforms, and strengthening the country’s resilience to future shocks.

He said initiatives related to sustainability will also be considered more broadly following the serious challenges of geopolitical uncertainty and climate change.

"Along with the post-Covid-19 economic recovery momentum, Budget 2023 will continue to prioritise the people’s welfare, particularly in improving income and social protection.

"Economic reform efforts will also be prioritised to ensure long term growth and increased competitiveness in business and value chains,” he said. — Bernama