People ride a bicycle at a park in Kuala Lumpur, Malaysia, March 11, 2022. (Xinhua/Zhu Wei)
The Malaysian economy is expected to improve further, with growth projected to be between 5.3 percent and 6.3 percent in 2022 amid the reopening of the economy and borders. The central bank noted that stronger private sector recovery, supported by labor market improvements, will be the main driver of growth.
KUALA LUMPUR, March 31 (Xinhua) -- Malaysia's central bank said Wednesday that the Malaysian economy is expected to improve further, with growth projected to be between 5.3 percent and 6.3 percent in 2022 amid the reopening of the economy and borders.
The economic recovery is underpinned by the continued expansion in external demand, full upliftment of containment measures, reopening of borders, and further improvement in labor market conditions, the bank said in its economic and monetary review 2021 report.
Passengers walk at the Kuala Lumpur International Airport in Sepang of Selangor, Malaysia, March 9, 2022. (Photo by Chong Voon Chung/Xinhua)
In addition, it said the implementation of investment projects and targeted policy measures will provide further support to economic activity and aggregate demand.
"While we are not yet out of the woods, we are better prepared now. The better COVID-19 management and higher vaccination rates will help mitigate the adverse impact from future resurgences and thus protect our healthcare system from being overwhelmed. With these factors in mind, we expect less disruption to economic activity and spending in the event of resurgences" it said.
The Malaysian economy registered a growth of 3.1 percent in 2021 as the recovery was affected by the reimposition of containment measures.
People wearing face masks walk across a street in Kuala Lumpur, Malaysia, Feb. 24, 2022. (Photo by Chong Voon Chung/Xinhua)
Malaysia, as an open economy, will continue to benefit from the expansion in global demand, which would support both investment and activity and the labor market, said it.
The bank noted that stronger private sector recovery, supported by labor market improvements, will be the main driver of growth in 2022.
Progress in vaccinations and upliftment of containment measures will lead to an improvement in consumer confidence and some materialisation of pent-up demand.
As a result, the bank said private consumption is expected to grow by 9 percent in 2022, while private investment is also expected to recover, growing by 5.3 percent, supported by the continued expansion in global demand and the implementation of new and ongoing investment projects.
A child receives a dose of COVID-19 vaccine in Kuala Lumpur, Malaysia, Feb. 13, 2022. (Photo by Chong Voon Chung/Xinhua)
However, it said overall, the risks to domestic growth are tilted to the downside with the potential reimposition of broad-based containment measures due to a resurgence in COVID-19 being a key downside risk.
In addition, slower-than-expected rollout of public infrastructure projects, more persistent labor shortages and supply disruptions, and higher-than-expected inflation could also affect the recovery path, according to the bank.
On the external front, worsening supply chain disruptions, heightened volatility leading to disorderly financial conditions, as well as prolonged and further escalation of geopolitical tensions could significantly affect Malaysia's growth and trade outlook, said the bank.
Nevertheless, it said higher-than-expected global growth and stronger-than-expected improvement in tourism-related sectors amid reopening of borders pose an upside risk to domestic growth.■
