The Economy Minister previously mentioned that Malaysia has the potential to become a high income status nation by 2028. A high-income economy is defined by the World Bank as a country with a gross national income per capita of US$13,845 or more in 2022, calculated using the Atlas method. In 2022, Malaysia’s GNI per capita in current prices was US$12,035 (RM52,968), compared with US$10,191 (RM42,838) in 2020.
As the GDP grew by 5.9% per annum in 2021 – 2022, Malaysia’s economy is on track to grow between 5.0% and 5.5% per annum for the remainder of the 12MP, or 2023 – 2025, driven by domestic demand, particularly private-sector expenditure. In 2023, the Malaysian economy is projected to expand close to the lower end of the 4.0% to 5.0% range. We are looking at 4.2% this year.
We find this target is realistic but a little bit ambitious. Assuming a mid-point target of 4.5% in 2023, in order to achieve that 5% to 5.5% for 2023 to 2025, real GDP should hit 5.5% for 2024 and at least 6% for 2025. Our medium-term forecast is slightly lower than that. While it is too early to tell, risks remain to the downside especially with major concerns on the deceleration of growth in China and rapid reverse of tightening monetary policy in major central banks globally. Most multilateral agencies such as the IMF and the World Bank are adjusting their respective next year’s forecasts lower.
To achieve these goals, emphasis will be placed on high-growth, high-value (HGHV) sectors and industries, including the energy transition-based industry, which was implemented through the National Energy Transition Roadmap (NETR), technology and digital-based industries, and enhancing the competitiveness of sectors and industries under the New Industrial Master Plan (NIMP) 2030. To recap, the NETR has identified 10 strategic and high-impact flagship projects with an expected investment of RM25bn, creating 23,000 high-quality job opportunities and reducing 10,000 gigagrams of carbon dioxide equivalent per year. These five HGHV industries have been identified as part of the 'Big Bolds' in the MTR of the 12MP.
It is worth highlighting that private consumption is anticipated to increase at an average annual rate of 6.1%, supported by improvement in labour market conditions, with the economy to remain in full employment and the inflation rate expected to remain manageable. Inflation is expected to be between 2.8% and 3.8% per annum.
On the supply side, the services sector is expected to grow at an annual average rate of 5.7%, particularly led by consumer-related activities, such as in the retail trade, accommodation, and food and beverage sub-sectors. Efforts will be undertaken to increase the contribution of the modern services sub-sector by focusing on the information and communications technology services industry, and leveraging financial technology, as one of the initiatives under the Big Bold Digital- and Technology-based HGHV Industry.
Meanwhile, the manufacturing sector is expected to grow by 4.9% per annum, with priority to be given to accelerating the transition towards new sources of growth within the sector, particularly in E&E.
Source: TA Research - 12 Sept 2023
Created by sectoranalyst | May 31, 2024
Created by sectoranalyst | May 31, 2024
Created by sectoranalyst | May 31, 2024