Despite the World Bank lowering its forecast for Malaysia's gross domestic product (GDP) growth in 2023 to 3.9% from an initial projection of 4.3%, Malaysia's Deputy Finance Minister I Datuk Seri Ahmad Maslan has stated that the country will maintain its GDP forecast between 4% and 5% for the same year. The announcement was made on Tuesday, during the Malaysia-China Entrepreneur Macro Health Forum and Grand Sian Celebrity Charity Gala Night.
"We respect the World Bank's analysis. But we will keep our forecast at around 4% to 5%, as there has been no change in terms of the projections or if there's any big growth expected this year," said Ahmad Maslan.
The World Bank's revision is attributed to the base effects of high growth last year and weak external demand, as reflected in the country's export numbers for the first two quarters. Despite this, the World Bank lead economist for Malaysia, Dr. Apurva Sanghi, expressed optimism about the economic outlook for 2024, forecasting a growth rate of 4.3%. This positive projection is based on an anticipated recovery in tourism, improved global economic conditions, and the impact of base effects.
On Monday, just before Ahmad Maslan's statement, Dr. Sanghi had addressed reporters at a briefing where he outlined potential risks and opportunities for Malaysia's economy. He warned that deeper global growth shocks could potentially result in a more substantial slowdown than anticipated, and that higher domestic inflation could weigh on consumption spending and prompt further monetary tightening.
However, Dr. Sanghi also noted that as the economy continues to grow, it is expected that poverty and income inequality will decrease further, provided that it is accompanied by policies that enhance inclusiveness. He also highlighted the importance of having effective and well-targeted social protection programs in place to assist the approximately 490,000 Malaysian households still grappling with the aftermath of Covid-19.
In this context, he commended the government's initiative to establish PADU (Pangkalan Data Utiliti Kebangsaan), the national household socio-economic database, as a tool for identifying eligible beneficiaries, ensuring broader coverage and enhanced protection.
Despite these varying forecasts and potential challenges, Malaysia's economic outlook remains cautiously optimistic with a focus on inclusive growth and effective social protection.
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