MIDF expects robust GDP expansion rate in Q3 amid strong jobs growth

08/11/2022 08:02 PM

KUALA LUMPUR, Nov 8 (Bernama) -- Malaysia is likely to report a robust gross domestic product (GDP) expansion rate in the third quarter of this year (Q3 2022), buoyed by a strong recovery in the labour market, said MIDF Amanah Investment Bank Bhd. 

MIDF expects the Q3 2022 GDP to grow +12.5 per cent year-on-year (y-o-y) compared to +8.9 per cent y-o-y in the second quarter this year, it said in a note today.

Both labour force and employment growth hit a record high of +3.1 per cent y-o-y and +4.1 per cent y-o-y, respectively for Q3 2022.

"Malaysia’s labour market recovery continued as the jobless rate touched a new pandemic low of 3.6 per cent in September 2022.

"The labour force and employment continued expanding 2.9 per cent y-o-y and 3.8 per cent y-o-y respectively, supported by robust domestic economic growth and upbeat external front,” it said. 

In addition, Malaysia’s average unemployment rate is forecast at 3.8 per cent for 2022, while the labour market in Malaysia is expected to strengthen further in the fourth quarter of this year (Q4 2022) underpinned by upbeat momentum in the domestic economy and steady expansion in the external sector.

Moving forward, MIDF expects Malaysia’s labour market to stay in a recovery trend as indicated by the job-vacancy rate of 56 per cent in August 2022. 

“With this upbeat labour market performance, we are optimistic of stronger consumer spending in the second half of 2022 (H2 2022) onwards. 

“Plus, the receding unemployment rate may lead Bank Negara Malaysia (BNM) to consider further normalisation of the overnight policy rate (OPR) in the upcoming Monetary Policy Committee (MPC) meeting in January 2023. 

“Looking at the 2023 outlook, we believe Malaysia’s economy can stay in an upward trajectory underpinned by robust domestic demand, international borders reopening, revival of construction projects, expansion of primary sectors amid elevated global commodity prices and modest external trade activities,” said MIDF. 

In addition, MIDF considers post-15th General Election (GE15) would reduce domestic political uncertainties and certainly the new government will table an expansionary fiscal policy for 2023.

MIDF believes stimulus bullets for labour market recovery and domestic economic growth would be among the major elements in the upcoming Budget 2023 after GE15.


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