RAM upgrades Malaysia’s growth prospects on the back of strong recovery

Published on 01 Sep 2022.

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In its Economic Update 2022 report released today, RAM Ratings expects the robust recovery charted by the Malaysian economy in 1H 2022 (6.9% y-o-y) to pave the way for Malaysia’s full-year GDP growth to surpass its expectations and the 5.3%-6.3% guided by Bank Negara Malaysia (BNM). We have upgraded our earlier GDP growth estimate to 6.8% for 2022 (from 5.8%) while maintaining our forecast of 4.5%-5.5% for 2023.

Economic performance in the first half was buoyed by strong domestic demand (8.6% y-o-y) as the country began its transition into an endemic phase. Consumption rebound was also enabled by a steady recovery in the labour market, which saw the unemployment rate fall to 3.8% in June. Exports, another key contributor, grew 6.1% y-o-y in volume terms in 1H 2022 despite ongoing global supply chain disruptions. The country’s overall output in 2022 will be only 4% higher by RAM’s estimate compared to the 2019 level. This and the negative output gap suggest there is still slack capacity to drive growth next year.

We continue to be cautious of looming headwinds that could intensify further in the coming months and into 2023 as global inflation stays persistently high and global central banks remain focused on achieving price stability through aggressive interest rate hikes. These developments, along with the ongoing slowdown in China’s economy, are expected to dampen global demand and economic prospects moving ahead. Closer to home, expectations of another OPR hike in September and high food inflation, could blunt domestic consumption.

Summary of RAM’s key projections

Sources: Department of Statistics Malaysia, BNM, Bond Pricing Agency Malaysia, Ministry of Finance Malaysia, RAM
Note: 2022f figures are RAM projections


Analytical contact
Woon Khai Jhek, CFA
(603) 3385 2512

Media contact
Tho Li Ming
(603) 3385 2511


About RAM Rating Services Berhad (RAM Ratings)

Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 


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Publication Date Published Category
Economic Update 2022 01-Sep-2022 Economic Outlooks View PDF