Finance Minister: 2023 Will Be Challenging For All Countries, Including Malaysia
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(Image: Malay Mail/Yusof Mat Isa)

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has said that Malaysia will not escape the impact of the expected global economic slowdown in 2023. This is as all three global economic drivers – Europe, China, and the United States (US) – are expected to record a slower growth rate next year as compared to 2022.

The minister explained that an economic slowdown is inevitable for Malaysia as it is a country with an open economy, especially with its major trade partners experiencing a dip in their growth. “All the world’s countries will be (affected) because this time now, all the major economies are expected to slow down – Europe, US, and China. If you remember during the global financial crisis in 2007 to 2008, China grew 7% to 8%, so that helped mitigate the slowdown in the world economy, but this time, all three economies are expected to slow down in 2023 compared to 2022,” he said, although he also stressed that this is only a forecast.

Given the pessimistic projection, however, Tengku Zafrul said that Malaysia must do all it can to alleviate the impact of the situation. As such, Budget 2022 will continue to prioritise Malaysia’s structural reform agenda and maintain the country’s economic recovery momentum. Additionally, it will ensure the well-being of the people, and strengthen their resilience against future challenges.

malaysia landscape
(Image: The Star)

Aside from noting the inevitability of an economic recession in 2023, Tengku Zafrul also shared his opinions on Malaysia’s expected growth in the immediate future: the fourth quarter of 2022 (4Q22). With the global economic outlook dampened by various reasons – including the geopolitical tensions between the US and China, ongoing Ukraine-Russia conflict, and China’s zero-Covid policy – Malaysia’s 4Q22 growth will also likely be affected, he said.

“The Asian Development Bank (ADB) lowered China’s GDP forecast to 3.3% for 2022, the lowest rate compared to other Asian developing countries for the first time since 30 years ago. Climate change factors as well are expected to disrupt the productivity of major food producers such as India, thus contributing to the increase in commodity and food prices. These factors will continue to put pressure on inflation rates and food security around the world, including Malaysia,” Tengku Zafrul elaborated.

At present, however, Tengku Zafrul said that Malaysia’s economy continues to record positive figures, with inflation under control and the unemployment rate continuing to decline. It is also seeing positive GDP growth and foreign trade.

(Image: The Malaysian Reserve)

To note, Malaysia’s inflation for July stood at 4.4%, while the first seven months of 2022 saw an inflation of 2.8% – among the lowest in the world. Meanwhile, the unemployment rate has gradually lowered over the past few months to 3.7% for July, complemented by a continuous positive GDP recovery since the fourth quarter of 2021; the latest GDP growth figure in 2Q22 is recorded at 8.9%.

The current numbers thus far have given Tengku Zafrul good reason to believe that Malaysia’s overall GDP for 2022 will still be able to meet the projected growth of 5.3% to 6.3% – and may even surpass this official estimate. “The confidence is coming from the numbers that we’ve seen on the ground, third-quarter numbers look very strong,” he said, adding that the growth numbers for 3Q22 is expected to be as strong as or stronger than 2Q22.

(Source: The Edge Markets)

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