(Bloomberg) — Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.
Malaysia said its economy returned to expansion at the end of 2021 amid easing pandemic restrictions, while flagging risks for this year from inflation, further virus disruptions and global growth.
Gross domestic product growth in the December quarter rebounded to 3.6% from a year earlier, Malaysia’s central bank said Friday, beating the 3.3% median growth expected in a Bloomberg survey. That pushed full-year GDP up 3.1%, within the official forecast range of 3%-4%.
Advertisement
Article content
Growth is expected to accelerate going forward as Malaysia rolls out vaccine booster shots and prepares to reopen its borders. The country is poised to benefit from stronger global demand and higher private spending in 2022, according to the central bank.
All sectors of the economy showed improvement in the last quarter, Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said in a briefing Friday, adding that momentum through this year will be driven by global demand and trade, as well as resumption of domestic activity.
“Going forward, Malaysia’s GDP should be able to record respectable growth, given there are likely to be fewer restrictions on mobility following the indication that international borders would reopen in March,” said Mohd Afzanizam Abdul Rashid, chief economist at Bank Islam Malaysia Bhd. The economy will likely grow 5.5% in 2022, he said, while flagging risks to the forecast from supply chain issues and the prospect of higher borrowing costs.
Advertisement
Article content
Malaysia’s main equity index rose 0.6% to more than a three-month high at the close. The ringgit fell 0.2% to 4.1902 per dollar while 10-year bond yields were up two basis points to 3.72%.
Policy Support
Shamsiah added that cost pressures remain from high commodities prices and supply-chain issues, and that inflation is expected to edge up this year while its core measure will remain “modest.” She cautioned that there would be an impact on the economy from “premature withdrawal” of monetary policy support.
“We will remain vigilant of the latest developments and any new data,” she said. “Any adjustment to the degree of accommodation will depend on how these developments will affect the growth and inflation outlook.”
Advertisement
Article content
Given the nation’s current-account surplus, Bank Negara Malaysia can “still afford to hold out a bit more unlike some of its EM peers” on raising rates, said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore. “We see a rate hike to come only in 3Q, and by a muted 25 basis points this year.”
Risks to Malaysia’s outlook include slower-than-expected global growth and financial market volatility, higher commodity and energy prices and worsening supply-chain disruptions, as well as tighter pandemic restrictions domestically, Shamsiah also said Friday.
The official GDP forecast this year is for 5.5%-6.5% expansion, with the central bank set to announce any revisions on March 30.
Avoiding Lockdown
Advertisement
Article content
Malaysia has said it will avoid a repeat of last year’s lockdowns that pushed GDP into contraction for two quarters. The country’s rising vaccination rate — about 54% of the adult population had received booster shots as of Thursday — has kept hospital admission rates manageable amid the omicron wave.
New Covid cases on Friday topped 20,000 for the first time since early September. Still, only 158 patients were in the ICU compared with more than 1,500 at the peak of the delta wave in August, data from the health ministry show.
That prompted a government advisory council to propose the country reopen its borders by March, potentially boosting consumer spending and benefiting key sectors such as banking and construction. That came days after the Health Ministry said it would recommend such a move only after the booster rate improved.
Compared to the previous three months, the economy last quarter grew 6.6% on a seasonally adjusted basis, compared to a 6.3% median expectation in the Bloomberg survey.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
