Tengku Zafrul: Higher Revised Global Growth Forecast Boosts Malaysia’s Trade

The latest upgrade in the global economic growth outlook for this year bodes well for Malaysia, and is set to contribute positively to the country’s trade performance, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

The World Bank recently revised upwards its global growth forecast to 2.1% for 2023, stronger than the estimated 1.7% it forecast in January.

Concurrently, it raised its 2023 growth forecasts for the US to 1.1% and China to 5.6%, both of which are Malaysia’s largest trading partners.

Malaysia’s gross domestic product (GDP) growth forecasts were raised by 0.3 percentage point over January’s estimates to 4.3% for 2023 and 4.2% for 2024.

Meanwhile, the Organisation for Economic Co-operation and Development (OECD) revised its growth outlook for the world economy to 2.7% from 2.6%, amid easing inflation and the lifting of China’s Covid-19 restrictions, but cautioned of a long road ahead to attain strong growth.

“This upward revision should be positive for countries like Malaysia, whereby trade plays a major role in the economy.

 “What we’ve seen is that the growth, trade is still positive, but compared to last year, there is a moderation in growth,” he told Bernama.

Malaysia’s trade stood at about 140% of the country’s GDP, the minister said.

In another development, the World Trade Organization forecast a lower trade growth this year at 1.7%, compared with 2.7% last year, before picking up to 3.2% in 2024.

Nevertheless, Tengku Zafrul is confident that the volatility in the currency market will not cause a trade deficit in Malaysia.

“I’m not concerned about the trade deficit, because we are driven by strong exports coming from the electrical and electronics sector, with a contribution to GDP of about 6%.

“The sector continues to see strong global demand, and we stand to benefit from this. We stand to benefit from the realignment of the supply chain to Malaysia given the global geopolitical scene,” he noted.

Malaysia has maintained a trade surplus since May 2020.

In 2022, Malaysia’s total trade surpassed the RM2 trillion mark for the second consecutive year to register RM2.8 trillion. Exports amounted to RM1.6 trillion, while imports reached nearly RM1.3 trillion.