Malaysia is on track to achieving a GDP growth of between 5.3% and 6.3% in 2022, Finance Minister Tengku Zafrul Aziz said today.
"I feel very optimistic that we will achieve the GDP forecast of between 5.3% and 6.3%," he said in an interview with CNBC this morning.
Zafrul said Malaysia’s economic growth is expected to accelerate in the third quarter of 2022 (Q3 2022), continuing the positive economic momentum in the first half of the year, driven by private consumption following the resumption of economic activities in the country.
Malaysia’s GDP expanded by 8.9% in Q2 2022, aided by a boom in overseas trade with both export and import values hitting record highs in June.
However, the country’s economic outlook going into 2023 is expected to be challenging due to concerns over a global economic slowdown, China’s stumbling growth and the US Federal Reserve’s aggressive monetary tightening.
"Even the International Monetary Fund and the World Bank have revised their global growth forecast, (due to events such as) the Ukraine-Russia conflict.
"China, which is Malaysia’s largest trading partner, has also implemented a very conservative Covid-19 policy, and this has disrupted the supply chain between Malaysia and China," Zafrul said.
Meanwhile, he said Malaysia's budget deficit is expected to remain at 6.0% in 2022, noting that the debt-to-GDP ratio currently stands at 60% – well below the ceiling of 65%.
"We will have to stick to that 6.0% deficit. We need to make sure that the revenue is as per budget or at least matches what we need to do to cover the higher expenses due to subsidies," he said.