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Malaysia GDP Q3 2022

Malaysia: GDP growth soars in Q3 on a low base and robust domestic demand

GDP growth improved to 14.2% year on year in the third quarter, from 8.9% in the second quarter, marking the best result since Q2 2021. The headline expansion was due to a favorable base effect and resilient domestic demand.

Government consumption picked up to a 4.5% expansion (Q2: +2.6% yoy). Additionally, fixed investment growth improved to 13.1% in Q3, from the 5.8% increase recorded in the prior quarter. Meanwhile, household spending growth eased, but remained robust at 15.1% (Q2: +18.3% yoy).

On the external front, exports of goods and services growth hit an over one-year high of 23.9% in the third quarter, picking up from the second quarter’s 10.4%. In addition, imports of goods and services growth sped up to 24.4% (Q2: +14.0% yoy).

Nevertheless, underlying momentum continued slowing: On a seasonally adjusted quarter-on-quarter basis, economic growth cooled to 1.9% in Q3, following the previous quarter’s 3.5% growth. Q3’s reading marked the worst reading since Q3 2021.

Commenting on risks to the outlook, Debalika Sarkar and Sanjay Mathur, economists at ANZ, said:

“[The] external environment is becoming unfavorable. There are clear signs of weakness in export demand, with the new export orders sub-index of the manufacturing PMI steadily contracting for the fourth straight month […]. The uncertainties surrounding global growth, a maturing tech cycle and the aggressive tightening by the US Fed are potential risks. […] The impact of the central banks policy rate hikes will also become more prominent over the coming quarters. Overall, we believe that Q3 GDP marks the peak of the cycle.”

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