Malaysia’s Q1 GDP beats forecasts amid recovering demand | Business and Economy

Gross domestic product increased 5% in the January-March period, up from 3.6% in the previous quarter.

Malaysia’s economy grew more than expected in the first quarter, boosted by recovering demand and a stronger labor market, the central bank said on Friday.

Gross domestic product (GDP) grew 5% in the January-March period, up from 3.6% in the previous quarter.

Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said the central bank has included the Russia-Ukraine war in its forecasts and growth in 2022 will be supported by continued expansion of demand in and abroad.

Nor Shamsiah said downside risks include Russia invading Ukraine and locking down China to contain the COVID-19 outbreak, as well as prolonged supply chain disruption.

“While downside risks have increased on the global front, we are confident about our growth trajectory and we do not see a risk of a recession in Malaysia,” she told a news conference. .

BNM left its 2022 economic growth forecast unchanged at 5.3-6.3%, downgraded in March. Malaysia, which has seen some of the worst COVID-19 outbreaks in the region – has lifted most of its anti-coronavirus measures this month, as infection rates slow amid a boosted vaccination program.

On Wednesday, the central bank unexpectedly raised its benchmark interest rate to 2% from a historic low of 1.75%, citing a firmer domestic growth path as well as inflationary pressures stemming from the recession. Ukraine conflict and global supply chain disruption.

“If the positive growth trajectory continues and there are no unexpected shocks, then MPC would be appropriate [Monetary Policy Committee] to further reduce monetary parity,” she said.

Headline inflation is forecast to average 2.2-3.2 percent this year, unchanged from BNM’s previous estimate.

Deputy Governor Marzunisham Omar said that while there are pressures on prices, especially food, inflation in Malaysia remains moderate compared to other countries.

“The economy still has some stagnation. We have price controls in place for fuels and other food items that help ease price pressures,” said Marzunisham, adding that more long-term solutions are needed to contain inflation.

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