THE past year has been filled with political turmoil, Covid, inflation and high interest rates, not food supply shortages due to the Russia-Ukraine conflict.

The New Year is expected to pose tough economic challenges globally.

Several analysts interviewed by The Malaysian Insight spoke of their outlook on the country’s economic prospects against the backdrop of the global economy.

According to economist Kerk Loong Sing, next year’s economy is very much dependent on the current economic performance.

“This year, our country’s GDP rose by 5% in the first quarter, 8.9% in the second quarter, and even more surprisingly in the third quarter, increasing to 14.2%,” Kerk said.

“We need to continue to stabilise from the first to the third quarter. The rapid rise makes it very safe to predict that the economic growth in 2022 will definitely exceed the government’s original forecast of 5.3 to 6.3%, and the minimum will be 7%. However, my personal forecast, it may exceed 8%.

“From this point of view, does it mean that 2023 is definitely good? Well, that’s not necessarily the case,” he added. 

Many economists have predicted there will be a global economic recession. Kerk said Malaysia is a very open economy, import goods from countries around the world, which could be an important economic basis.

“If the world falls into an economic recession, our country’s economy will certainly be affected. China is our largest trading partner, and the next is the European Union and the United States.

“However, if we are more optimistic, there might not be a global recession in 2023, or as some people predicted that only one-third of the countries in the advanced economies of Europe and the US may fall into a global recession.

“As for Asia, it is generally believed that they will not be greatly affected and will continue with positive growth,” Kerk said.

Against such a backdrop, he said there is optimism as well as pessimism.

“The most important key is the political change in our country. After the confidence vote was passed in parliament, Malaysia has moved from a phase of political instability to stability.

“This will give foreign investors the confidence to invest in Malaysia.

“In addition, we have also seen that after the new government came to power, it has continued to maintain relations with China,” he said.

“China’s Foreign Minister Wang Yi invited Prime Minister Anwar Ibrahim to visit, and International Trade and Industry Ministry Tengku Zafrul Abdul Aziz also said that he will visit China in the new year.”

Kerk, who is also the vice president of Malaysia-China Chamber of Commerce, said maintaining a close relationship with China will definitely help Malaysia’s economic development.

“Also, China’s strong measures on the Covid-19 epidemic have been eased. As long as China opens up, it will drive the development of the world economy, and our country will also benefit from it.

“I am very cautiously optimistic of the country’s economic growth next year, and I believe it will develop and move in a positive direction.

“However, there are still two issues to worry about, which are also important factors that we cannot predict: the development of the global pandemic and the war between Russia and Ukraine,” he said.

Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general and chairman of the SMEs committee Koong Lin Loong said the new government will send a positive message to the outside world through the confidence vote.

“I believe that the economy will be optimistic next year, because Malaysia has already held its general election this year. It would have been unthinkable if the polls had been delayed till next year.

“At the same time, the prime minister also won in his confidence motion, which sends a good message to the rest of the world and international fund managers, saying that Malaysia’s political situation is now stable.

“This is very important. Let us bid farewell to the instability of the past, especially when we had three prime ministers in three years. Now that our politics are more stable, this should produce sustainable policies.

On Monday, Anwar breezed through a confidence vote in parliament with two-thirds of MPs supporting him.

Apart from politics, Koong believes China’s reopening will also augur well for Malaysia.

“If China opens up, Malaysia could attract tourists, because travel and tourism will help Malaysia a lot.”

He added that while the economic prospects next year are positive, there are also worries, which he claimed to be the slowdown of the US economy.

On the other hand, economist Phua Lee Kerk pointed out that the US economy may enter into a recession in the first quarter of next year.

“This is a considerable risk because no one knows how long the recession will last. And if the US declines, Malaysia’s exports will be affected, and this will impact the country’s economic growth,” he said.

Although everyone expects China to open up, he said that the world would still be affected if the US economy slows down.

Phua also noted a rumoured large-scale aggression before the first anniversary of Russia’s invasion of Ukraine on February 24 next year, which could dampen global economic prospects.

However, Malaysia should slowly enter a normal economic growth track, if the supposed risks do not take place, he added. – December 23, 2022.