KUALA LUMPUR, Feb 14 — Fitch Solutions Country Risk and Industry Research (Fitch Solutions) has reiterated its forecast for Malaysia’s real gross domestic product (GDP) growth to slow to 4.0 per cent in 2023 from 8.7 per cent last year.
It said that following the lower year-on-year growth of 7.0 per cent in the fourth quarter of 2022 against 14.2 per cent in the third quarter, economic growth would slow further over the coming quarters.
“While we expect the economy to return to growth over the coming quarters (on a quarter-on-quarter basis), we believe that the pace of economic expansion will moderate significantly going forward as credit conditions tighten further and pent-up demand fades.
“Moreover, the export outlook will likely weaken further on the back of a slowing global economy and as the semiconductor industry continues to be in a downcycle,” it said in a statement today.
Fitch Solutions said private consumption growth is expected to slow to 5.0 per cent this year from 11.5 per cent in 2022 while gross fixed investment growth would slow to 2.0 per cent versus 6.8 per cent last year.
On the outlook, it said should the Russia-Ukraine war escalates and sanctions against Russia be tightened, it could lead to upside commodity price volatility and exacerbate the global shortage of key commodities such as oil and palm oil, of which Malaysia is a net exporter.
On the downside, it added, a global recession would lead to a further slowdown in trade activity, and with exports accounting for close to 74 per cent of Malaysia’s GDP, this would have an adverse impact on headline growth, it added. — Bernama
