Ram Ratings said the resolution of issues related to foreign workers and supply chains should provide additional impetus for growth. (Bernama pic)
KUALA LUMPUR: RAM Ratings has projected Malaysia’s gross domestic product (GDP) growth to slow to 4-5% in 2023 from an estimated 8.2% in 2022.
The rating agency said global economic slowdown is anticipated to dampen Malaysia’s exports while the still notable price pressures and tighter monetary conditions might 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,” it said in a statement today.
It said Malaysia’s broad and diversified base would cushion intensified headwinds to growth in 2023.
RAM Ratings said the economic growth would also be supported by stronger labour market conditions next year with the average unemployment rate projected to fall to 3.5% from an estimated 3.8% in 2022.
It said the resolution of issues related to foreign workers and supply chains should also provide additional impetus for growth.
Meanwhile, it said sharper-than-expected deterioration in the global economy and/or domestic inflation are key downside risks for next year.
On the fiscal side, the rating agency said the more moderate commodity price levels and in turn the related subsidy expenditure, might keep the fiscal deficit contained within 5.4% of GDP from an estimated 5.8% in 2022.
“This estimate is still subject to the final formulation of subsidy rationalisation plans for key items, including petrol and electricity tariffs,” it said.
It said with the status quo, the current fiscal space remained fairly tight with government debt projected to reach RM1.1 trillion in 2023 or 62.4% of GDP and debt servicing at a significant 16.9% of total projected revenues for 2023 from an estimated 15.1% in 2022.
