'It's not pretty even though analysts predict moderate growth.'
Maybank Investment Bank Research has set Malaysia's economic forecast for 2023 to moderate due to external economic challenges and sluggish domestic demand.
Citing the firm's recent report, the country's full-year growth is forecast to moderate to 4% in 2023 compared to 8% in 2022 with domestic demand seen weakening.
It was also stated that private sector growth will slow down due to the lack of spending from the reopening of the economy, plus the impact of high inflation and the impact of interest rates on the cost of living.
The public sector will moderate, in line with the allocation of low government management expenses in the 2023 Budget.
Another firm, MIDF Research echoed the same tone by forecasting Malaysia's gross domestic product (GDP) to moderate to 4.2% for 2023 due to contraction in foreign trade performance and weakness in global demand.
MIDF explained that Malaysia's export growth will slow to 2.8% compared to the forecast of 12.5% during 2022, supported by an increase in service exports due to tourism activities.
Following that, Malaysia is expected to benefit from the export of commodities such as palm oil, petroleum and liquefied natural gas because the average price of crude palm oil and other crude crude is predicted to remain high.
On the other hand, Affin Hwang Investment Bank said Malaysia's open economy will be drastically affected due to the decline in global growth and put the 2023 GDP forecast at 3.7% from 4.7% previously.
However, firms are dismissing the possibility of a recession due to good labor market conditions and the steady recovery of the tourism-related industry.
