Bank Negara Malaysia (BNM) said on Friday (Feb 11) that Malaysia’s economy, as measured by gross domestic product (GDP), grew 3.6% in the fourth quarter of 2021 (4Q21) from a year earlier (y-o-y) as economic activities resumed with the easing of COVID – 19 pandemic-driven containment measures.
“With the turnaround in growth in the fourth quarter, the economy grew by 3.1% in 2021 as a whole, and the unemployment rate declined to 4.6%,” BNM said in a statement.
The central bank added that the rebound in economic activities in 4Q21 was aided by a recovery in the labour market as well as continued policy support.
In addition, strong external demand amid the continued upcycle of global technology provided a further lift to growth, according to BNM.
Quarter-on-quarter, Malaysia’s economy registered an increase of 6.6% in 4Q21, the central bank said.
Meanwhile, BNM noted that Malaysia’s inflation, as measured by the Consumer Price Index, increased 3.2% in 4Q21 from a year earlier.
For 2021, average inflation was 2.5%, compared to a deflation of 1.2% in 2020, it added.
“As expected [for 4Q21], headline inflation increased to 3.2% during the quarter (3Q21: 2.2%). The higher inflation was mainly due to normalisation of electricity prices following the lapse of the three-month electricity bill discount implemented from July 2021,” the central bank said.
For 2022, BNM said the Malaysian economy is expected to remain on its recovery path, supported by continued expansion in global demand and higher private-sector expenditure given improving labour market conditions and ongoing policy support, as well as COVID – 19 vaccination progress.
“The continuation of major investment projects in both the private and public sectors will also support growth.
“However, the balance of risks remains tilted to the downside, mainly from developments surrounding Covid-19, both globally and domestically.
“[Malaysia’s] average headline inflation for 2022 is likely to remain moderate as the base effect of fuel inflation dissipates. The outlook, however, continues to be subject to global commodity price developments amid risks from prolonged supply-related disruptions,” BNM said.
Its governor Tan Sri Nor Shamsiah Mohd Yunus said in the statement that Malaysia is well positioned to continue benefiting from the expansion in global economic and trade activities.
“Acceleration of the Covid-19 booster vaccination programme and vaccination of children above five years old, coupled with sufficient capacity of the healthcare system, would improve domestic economic activities, thus strengthening the recovery momentum,” she added.
According to BNM’s statement, Malaysia’s y-o-y GDP growth of 3.6% in 4Q21 was helped by expansion on the supply and expenditure sides of the economy.
For the supply side, it said the services, manufacturing and agriculture sectors grew 3.2%, 9.1% and 2.8% respectively, though the mining and construction segments contracted 0.9% and 12.2% respectively.
“On the expenditure side, growth was driven mainly by an improvement in household spending and trade activities,” the central bank added.
- The Edge Markets