Higher GDP, FDI point towards economic recovery in 2022

GEORGE TOWN, Feb 11 – The growing momentum of gross domestic product (GDP) and foreign direct investment (FDI) registered in 2021 are pointing towards an economic recovery year for Malaysia this year.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government is quite optimistic that the worst is over for Malaysia after recording 3.1 per cent GDP and RM50 billion worth of FDI in 2021 compared with -5.6 per cent and RM14.6 billion FDI in 2020.

"The GDP growth achieved last year is in line with our expectations which is between 3.0 per cent and 4.0 per cent, which clearly shows an improvement in the economy's momentum," he told reporters after visiting Penang’s Urban Transformation Centre (UTC) here today.

Tengku Zafrul said the RM50 billion FDI achieved in for 2021, which is higher than previous years, also signalled that foreign investors are still confident in Malaysia’s economic prospects.

In 2020, Malaysia’s FDI recorded a net inflow of RM14.6 billion, a 54.8 per cent decrease compared with RM32.4 billion in 2019.

"This momentum is expected to continue, hence, the government still expects GDP to grow at the rate of 5.5 to 6.5 per cent this year. If there is a new projection, it will be announced in March.

"The only downside is the COVID-19 Omicron wave but it's not as dangerous as the delta," he said.

Meanwhile, the minister said the government is also looking at tabling a supplementary budget this year when Parliament convenes.

“We do not know the size of the budget yet but the focus will be to ensure our economy recovers and to help the vulnerable groups like the flood victims and traders.

“The prime minister himself had announced additional aid to those affected by the recent floods, as well as the farmers and the micro and small and medium entrepreneurs,” he added.

Meanwhile, in a statement, Tengku Zafrul said the economic recovery was also driven by the expansionary Budget 2022, normalisation of the economic and social activities due to high vaccination rates, resumption of projects with high multiplier effects, and strong external demand, especially from major trading partners.

He said the continual easing of movement restrictions, as well as more vigorous economic and social activities in tandem with strong domestic and external demand, were expected to support better economic growth.

Furthermore, he said the continued positive business and consumer sentiments were strengthened through the high vaccination rates, of which almost 80 per cent of the total population had been fully vaccinated.

"The government will closely monitor any inflationary pressures, especially on food items, and ensure that appropriate measures are implemented to reduce the people's concerns about their livelihoods," he said.