Macroeconomic outlook to improve further in Q2, says MIDF Research

KUALA LUMPUR, May 13 — MIDF Research expects the macroeconomic outlook to improve further from the second quarter of 2022 (Q2 2022) onwards as further relaxation of the standard operating procedures and reopening of international borders will support a continued pick-up in domestic economic activities.

In a note today, it said the sustained growth in the global economy and high commodity prices would also support Malaysia’s export outlook, and thus sustained growth in exports will be another factor to support economic growth this year.

“However, there are several downside risks which could affect growth outlook, including concerns over slowdown in China, prolonged disruptions in the global supply chain, ongoing war in Ukraine, and potential volatility in the financial market because of monetary policy tightening,” it said.

Therefore, the research house has maintained its projection for Gross Domestic Product (GDP) growth in 2022 at 6.0 per cent compared with 3.1 per cent in 2021.

“We anticipate growth momentum and business outlook to remain positive and domestic economic activities to grow further on the back of economic reopening,” it said.

On the global perspective, MIDF Research said the lockdown in China imposed in selected areas including Shanghai would adversely affect consumer spending and industrial production.

“In the United States, growth could also be affected by the more aggressive tightening of the monetary policy which resulted in the slowdown in household spending.

“However, for many economies, growth prospects will be more encouraging as countries move towards the endemic phase and proceed with the reopening of their economies,” it added.

On the economic growth data for Q1 2022, the research house said domestic spending activities expanded stronger during the quarter, in line with the increased mobility, and also backed by improvement in the labour market.

“Moreover, the sustained growth in exports also contributed positively to the GDP growth,” it said.

Compared to regional countries, it noted that Malaysia and the Philippines’ economies grew at a faster pace in Q1 2022 in contrast to sustained growth in Indonesia and slower growth in Singapore.

Malaysia’s economy has rebounded in Q1 2022, registering a five per cent growth versus a contraction of 0.5 per cent in Q1 2021. — Bernama