KUALA LUMPUR: All economic sectors in the country including export-oriented, services and electrical and electronics (E&E) sectors are projected to expand in 2022, according to Bank Negara Malaysia.
The improving growth trajectory would be driven by the recovery in domestic-oriented sectors as almost all economic and social sectors return to normalcy amid Malaysia's high vaccination rate and rapid rollout of booster shots.
The re-opening of international borders would facilitate the recovery of tourism-related industries and alleviate pockets of foreign labour shortages in the domestic economy, Bank Negara said in its Economic and Monetary Review 2021 released today.
The central bank's governor Tan Sri Nor Shamsiah Mohd Yunus, meanwhile, said its current monetary policy stance would continue to remain accommodative to support economic recovery and ensure price stability.
At a virtual press conference on Wednesday, Nor Shamsiah said the current monetary policy remained in line with Bank Negara's decision to maintain the country's key interest rate at a historic low of 1.75 per cent earlier this month.
Nevertheless, she said Bank Negara had trimmed its economic growth forecast to between 5.3 per cent and 6.3per cent as the country's continued recovery would be slightly offset by the impact of the Russia-Ukraine conflict.
Bank Negara previously projected the economy to grow between 5.5 per cent and 6.5per cent in 2022 as borders and businesses reopened following the lifting of Covid-19 restriction.
Elaborating on the recovery, Bank Negara said export-oriented sectors would continue to benefit from strong external demand and expansion in domestic production capacity.
The services sector is projected to register a higher growth in 2022, led by the consumer and tourism related subsectors.
"The improvement is expected to be supported by lifting of nationwide containment measures and re-opening of international borders for tourism," it said.
Business-related services would continue to remain supportive of growth, Bank Negara said.
"This will mostly be in the logistics and professional services, in line with the continued expansion of manufacturing and construction activity," it said.
Bank Negara said while growth in the manufacturing sector was projected to increase at a more moderate pace, it would still be above the long-term average.
On the other hand, Malaysia's E&E cluster, which is highly integrated in global value chains, will benefit from continued demand for E&E products globally.
"Additionally, E&E growth will be further reinforced by ongoing expansions in domestic production capacity. In the bank's regional economic surveillance, E&E firms indicated strong order books for the year," it said.
Bank Negara said demand for refined petroleum products was expected to increase in line with higher mobility and economic activity, while continued health and hygiene awareness would support demand for rubber and chemical products.
The recovery in the agriculture sector will be driven primarily by higher oil palm production.
"This is premised on expectations for a gradual improvement in labour supply. Heavier rainfall in the early part of the year is also expected to improve soil moisture and increase oil palm yields in the latter part of the year," it added.
Bank Negara said the mining sector was projected to register higher growth, reflected by the continued increase in crude oil and natural gas production.
This will be due to the operationalisation of new facilities such as the Pegaga gas project in Block SK320 in offshore East Malaysia, which commenced operations in March 2022.
"Growth will also be supported by higher production in existing oil and gas facilities including the PFLNG2 facility and following the completion of several maintenance works. The end of OPEC+ oil output cut agreement by the second half of the year is also expected to result in higher production," it said.
Bank Negara said growth in the construction sector was expected to rebound in 2022 following the reopening of the economy.
"Ongoing construction activity in large infrastructure projects and implementation of small-scale projects under the 2022 Budget measures will support growth in the civil engineering and special trade subsectors," it said.
Meanwhile, Bank Negara said the residential subsector would benefit from new housing projects and launches, in tandem with the expected recovery in demand as income and employment prospects improve.
"Growth in the non-residential subsector is expected to be lifted by both existing and new commercial and industrial projects," it said.