KUALA LUMPUR, Feb 11 – The Malaysian economy registered a positive growth of 3.6 percent in the fourth quarter of 2021 against a negative 4.5 percent in the third quarter of 2021.
Bank Negara Malaysia Governor, Tan Sri Nor Shamsiah attributed the growth to the resumption of economic activities with the easing of Covid-19 related containment measures as well as a recovery in the labour market as well as continued policy support.
She said this during a virtual joint press conference she co-chaired with Chief Statistician Malaysia, Dato’ Sri Dr. Mohd Uzir Mahidin.
Barring any disruption to economic activities and supply chain in the course of the rising cases of Omicron, the Governor expects the growth momentum to continue into 2022. She also pointed to the Malaysia’s high vaccination rate and preparedness as factors for continued growth.
In a statement released in conjunction with the press conference, Bank Negara said strong external demand amid the continued upcycle in global technology provided a further lift to growth.
On the supply side, all economic sectors recorded improvements in growth, led by the services and manufacturing sectors. On the expenditure side, growth was driven mainly by the improvement in household spending and trade activity. On a quarter-on-quarter seasonally-adjusted basis, the economy registered an increase of 6.6% (3Q 2021: -3.6%).
With the turnaround in growth in the fourth quarter, the economy grew by 3.1% for 2021 as a whole, and the unemployment rate declined to 4.6%.
Headline inflation is expected to ease while core inflation is expected to remain up with the resumption of activities.
As expected, headline inflation increased to 3.2% during the quarter (3Q 2021: 2.2%). The higher inflation during the quarter was due mainly to the normalisation in electricity prices following the lapse of the three-month electricity bill discount implemented in July 2021.
Core inflation increased marginally to 0.8% during the quarter (3Q 2021: 0.7%) as economic reopening gathered momentum.
For 2021 as a whole, average headline inflation was 2.5% (2020: -1.2%), while core inflation averaged at 0.7% (2020: 1.1%).
The Malaysian economy is expected to remain on its recovery path in line with continued expansion in global growth and higher private sector spending
For 2022, the domestic economy is expected to remain on its recovery path, supported by the continued expansion in global demand and higher private sector expenditure given improving labour market conditions and on-going policy support.
The continuation of major investment projects in both private and public sectors will also support growth. Governor Tan Sri Nor Shamsiah explained, “Malaysia is well-positioned to continue benefitting from the expansion in global economic and trade activities. The acceleration of the COVID-19 booster vaccination programme and vaccination of children above 5 years old, coupled with sufficient capacity in the healthcare system, would improve domestic economic activities, thus strengthening the recovery momentum.” However, the balance of risks remains tilted to the downside, mainly from development surrounding COVID-19, both globally and domestically.
Average headline inflation for 2022 is likely to remain moderate as the base effect from fuel inflation dissipates. Core inflation is expected to edge upwards as economic activity normalises amid the environment of high input costs. Nevertheless, core inflation is expected to be modest, with upside risk contained by the continued slack in the economy and labour market. The outlook, however, continues to be subject to global commodity price developments amid risks from prolonged supply-related disruptions.
Bank Negara is expected to publish the Annual Report 2021 (AR 2021), Economic and Monetary Review 2021 (EMR 2021), and Financial Stability Review for Second Half 2021 on 30 March 2022.