KUALA LUMPUR (March 29): Bank Negara Malaysia (BNM) governor Tan Sri Nor Shamsiah Mohd Yunus warned that higher-than-expected domestic inflation and input costs could weigh on the country's growth outlook.
This is in addition to external headwinds that continue to present downside risks to growth, she said. “This includes a sharp tightening in global financial market conditions, further escalation of geopolitical conflicts, and extreme weather events," she told a media briefing on the launch of BNM's Annual Report 2022, the Economic and Monetary Review 2022 and the Financial Stability Review for the second half of 2022 on Wednesday (March 29).
At this juncture, the risks to Malaysia’s growth outlook are balanced, she said. And despite the headwinds, the central bank is projecting that the Malaysian economy will still grow between 4% and 5% in 2023, underpinned by firm domestic demand.
Further improvements in employment and income levels, as well as continued implementation of existing and new multi-year projects, are expected to underpin household spending and investment activities, said the governor.
“Higher tourism activities from rising tourist arrivals are projected to leave growth in high-touch services and sectors that were impacted during the pandemic,” she added.
The unemployment rate, which is expected to average to 3.5% in 2023, should drop steadily over the year to the pre-pandemic level of 3.3% by year end, the governor said.
“At 3.3% the economy will technically be at full employment,” she added.
Don't miss the other highlights of the BNM Annual Report 2022. Read the articles here.