Demand slump hampers Malaysia’s economic growth

A corner of Kuala Lumpur, Malaysia. (Photo: themalaysianreserve)

Kula Lumpur (VNA) – RAM Rating Services Bhd (RAM Ratings) forecast that the Malaysian economy possibly faces formidable challenges in the remaining months of this year amidst soft global demand and other headwinds.

The rating agency anticipated Malaysia’s economic momentum to grow slower at 4-5% in 2023 from 8.7% last year.

The country’s gross domestic product (GDP) during January - June decelerated to 4.2% year-on-year as global trade eased off. Exports declined 6.4% year-on-year in volume in the period.

Domestic demand, the key driver of economic growth, was also softer at 4.5%, compared to 9.9% recorded in the second half of 2022, it said.

A spike in global food and commodity prices due to supply distortion by geopolitics and/or tariffs would be a key downside risk that could inflate domestic prices, and hinder local consumption demand.

Falling global demand, aggravated in particular by China’s property crisis, could crimp Malaysia’s export growth.

However, RAM Ratings expected Malaysia’s economy to record a positive growth of 4.5% to 5.5% in 2024 thanks to robust labour market, increasing domestic demand, and improved export./.

VNA