KUALA LUMPUR: Bank Negara Malaysia is keeping its gross domestic product (GDP) growth projection at 5.3 per cent to 6.3 per cent for 2022.
Bank Negara governor Tan Sri Nor Shamsiah Mohd Yunus said this was supported by private sector spending amid higher tourist arrivals, and recovery in labour market conditions, which would more than offset the moderation in external demand.
"However, given the strength in the first half of 2022 which grew by 6.9 per cent, we expect growth for the year to be at the upper end of the range of 5.3 per cent to 6.3 per cent, even after taking into account the slower global growth.
"For Q3, we expect that growth would be much higher because of the base effect," Nor Shamsiah told reporters after a briefing on Malaysia's second quarter (Q2) GDP here today.
According to Nor Shamsiah, growth for the rest of the year and 2023 would be driven mainly by private sector expenditure, particularly as tourism sectors normalise towards pre-Covid levels.
She also said investment activity stood to benefit from the realisation of multi-year projects such as the MyDigital, East Coast Rail Link (ECRL) and the Light Rail Transit Line 3 (LRT3).
"Supply chains are also expected to ease as receding Covid-related disruptions and slowing global trade alleviate some of the pressures going forward. These would offset the expected moderation in global growth," she said.
Additionally, Nor Shamsiah said the central bank recognised that Malaysia's economic recovery was uneven, and improvement in some segments had continued to lag behind others.
While most economic sectors had recovered strongly, she said about 20 per cent of the economy still remained below pre-pandemic levels.
"This is most severe in the construction sector due to labour shortages and higher input prices. Tourism-related industries have only recently begun to recover.
"In the labour market, the recovery amongst vulnerable groups, particularly the youth and elderly along with low-skilled workers, is slower relative to other groups in the labour market.
"It is for these reasons, while macro policies are recalibrated as the overall economy recovers, targeted policies would continue to support these segments of society," she added.