Malaysia’s economy expands 5 per cent in Q1 after reopening spurs activity

Malaysia’s central bank said growth was driven by local demand and a recovery in jobs, and did factor in the Russia-Ukraine war in its projections

Malaysia had some of the worst Covid outbreaks in Southeast Asia, but lifted most coronavirus curbs this month, as infections slowed and vaccinations increased

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Food vendors serve a customer at a market in Kuala Lumpur, Malaysia. Malaysia’s economy grew at a faster-than-expected pace in the first quarter of the year as activity picked up with the easing of virus restrictions. Photo: Bloomberg

Published: 3:00pm, 13 May 2022

Malaysia’s economy grew at a faster-than-expected pace in the first quarter of the year as activity picked up with the easing of virus restrictions.

Gross domestic product expanded 5 per cent in the January-March period from a year ago, according to Bank Negara Malaysia (BNM). That is faster than the median estimate for a 4 per cent growth seen in a Bloomberg survey.

BNM Governor Nor Shamsiah Mohd Yunus said the central bank factored in the Russia-Ukraine war in its projections, and growth in 2022 would be supported by continued expansion in domestic and external demand.

Shoppers walk through a market in Kuala Lumpur. Malaysia’s economy grew 5 per cent in the first quarter from a year earlier, continuing to sustain its recovery following the lifting of pandemic curbs, the central bank said on Friday. Photo: Bloomberg

Downside risks also included the strict lockdown in China to stem the COVID-19 outbreak, as well as prolonged supply chain disruptions, Nor Shamsiah said.

“Although the downside risks have risen on the global front, we are confident of our growth trajectory and we do not see a risk of any recession in Malaysia,” she said.

Growth was driven by local demand and a recovery in jobs, the central bank said.

“If the positive growth trajectory continues and barring any unexpected shocks, it would be appropriate for the MPC to reduce the degree of monetary accommodation,” Nor Shamsiah said at the central bank’s first in-person briefing in two years.