Malaysian economy in good stead to weather choppy 2023

Published on 14 Dec 2022.

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In its Economic Outlook 2023 report released today, RAM Ratings expects Malaysia’s broad and diversified base to cushion intensified headwinds to growth in 2023.

The rating agency projects GDP growth to slow to 4.0%-5.0% from an estimated 8.2% in 2022. The global economic slowdown is anticipated to dampen Malaysia’s exports while the still notable price pressures and tighter monetary conditions may impact domestic consumption. That said, domestic demand is expected to drive the economy as businesses and households climb out of the lingering shadows of the COVID-19 pandemic. Growth will be supported by stronger labour market conditions next year, with the average unemployment rate projected to fall to 3.5% (2022e: 3.8%). The resolution of issues related to foreign workers and supply chains should also provide additional impetus for growth. Sharper-than-expected deterioration in the global economy and/or domestic inflation are key downside risks for next year.

On the fiscal side, the more moderate commodity price levels and in turn the related subsidy expenditure may keep the fiscal deficit contained within 5.4% of GDP (2022e: 5.8%). This estimate is still subject to the final formulation of subsidy rationalisation plans for key items including petrol and electricity tariffs. With the status quo, the current fiscal space remains fairly tight, with government debt projected to reach RM1.1 tril in 2023 (62.4% of GDP) and debt servicing at a significant 16.9% of total projected revenues for 2023 (2022e: 15.1%).

Summary of RAM’s key projections

Sources: Department of Statistics Malaysia, BNM, Bond Pricing Agency Malaysia, Ministry of Finance (MoF) Malaysia, RAM
Note: 2022e and 2023f figures are RAM and MoF 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 Outlook 2023 14-Dec-2022 Economic Outlooks View PDF