KUCHING: An economist here is not overly excited by Bank Negara Malaysia’s recent announcement that the country’s GDP had reached a 22-year high of 8.7 per cent in 2022.
Speaking to New Sarawak Tribune on Saturday, Dr Carmelo Ferlito said while the growth rate may appear impressive, it was important to consider the economic damage caused by the pandemic in the past three years.
“As it was to be expected, during the lockdown period of 2020-2021, our income was destroyed.
“The average yearly growth rate between 2020 and 2022 was only 1.97 per cent.” he said.
“As we foresaw, lockdowns and expansive fiscal and monetary policies led to a post-Covid rebound followed by an inflation-led economic contraction.”
“According to our analysis, the economy is witnessing a slowdown as indicated by the red line,” said Ferlito who is also the chief executive officer (CEO) of the Centre for Market Education (CME).
“Quarterly growth rates have steadily decreased, reaching a negative performance of -2.6 per cent in the last quarter. This suggests that the growth of the economy is beginning to cool down, primarily due to a decrease in private consumption while investments seem to be decelerating at a slower pace.”
However Ferlito noted that the economic contraction presents an opportunity to shift towards a new economic model of sustainable growth focused on savings and investments, instead of relying on private consumption and government spending.
“We believe that savings and investments are the key to sustainable economic growth, while an economic model based on consumption and government spending encourages debt and inflation.”
On Friday, the results of the fourth quarter of 2022 were revealed by Bank Negara.
The full-year GDP for 2022 showed a growth of 8.7 per cent compared to the previous year, marking the quickest growth in 22 years and surpassing the government’s estimated growth of 6.5 per cent to 7 per cent.
Governor of Bank Negara Nor Shamsiah Mohd Yunus said that Malaysia will not fall into a recession.
She added that the economy will grow at a more moderate pace due to a decrease in external demand, but it will still be sustained by domestic demand.
