KUALA LUMPUR, Aug 15 — Research firms are bullish on Malaysia’s economic outlook for the second half of this year (2H2022), based on the significant improvements in the country’s recovery momentum in the second quarter of 2022 (Q2 2022).

The positive recovery momentum was supported by increased domestic demand, continued improvement in labour market conditions and ongoing policy support.

Public Investment Bank Bhd (PublicInvest) said economic activities are expected to remain steady in 2H2022 going into 2023, amid dissipating pressures from supply chain disruptions and global inflation.

"Domestic demand is expected to remain firm, underpinned by improved consumption spending, higher tourist arrivals and the continued recovery in labour market conditions and income prospects.

"On private investments, ongoing works and implementation of multi-year and multi-billion ringgit projects like MyDigital, the East Coast Rail Link and Light Rail Transit Phase 3 will sustain activity,” it said in a note today.

However, PublicInvest said Malaysia’s growth momentum remains susceptible to downside risks, including policy movement in major economies, China’s strict lockdown policies and the ongoing Russia-Ukraine war.

"Raw material shortages and supply chain disruptions are expected to gradually dissipate in 2H2022 going into 2023, though the country’s impending 15th General Election within the coming year may be a distraction to our ongoing recovery,” it added.

Meanwhile, Ambank Research (Ambank) also expects Malaysia’s GDP to record positive growth in 2H2022, partly supported by the low base of -0.4 per cent in 2H2021.

"Besides the low base, we foresee the economy to continue benefiting from strong export earnings, backed by firm commodity prices, a still healthy global semiconductor environment, resource-based exports, and Foreign Direct Investment inflows,” it said.

Ambank also opined that domestic activities, primarily private expenditure, would continue to support the overall economic performance.

A pick-up in tourism activities following the opening of the borders would benefit tourism and tourism-related industries, while rising employment rate and accelerating growth traction in the informal sectors and the focus on sustainability would add positive impetus to private expenditure.

"But the upside to the economy is being contained by shortages of foreign workers at the entry-level and talents.

"These have resulted in significant losses in terms of business opportunities as well as revenue to the government. Businesses are struggling to cope with existing orders,” it added.

Echoing the sentiment, Maybank Investment Bank sees real GDP growth for Q2 2022 to accelerate to 11.7 per cent year-on-year compared to 5.0 per cent in the Q1 2022. — Bernama