Malaysia on track for 4-5 per cent GDP growth this year, BNM not revising target

Governor Tan Sri Nor Shamsiah Mohd Yunus said the growth would be anchored by firm domestic demand amid a challenging global environment.

"Risks to the growth outlook are fairly balanced.

"Downside risks are emanating primarily from external developments, while there are upside risks mainly from domestic factors such as stronger-than-expected tourism activity and the implementation of projects," she told a press conference after announcing the first quarter (1Q 2023) GDP performance here today.

Nor Shamsiah said although the economy is recording a better-than-expected expansion of 5.6 per cent in 1Q 2023, the central bank is not going to review or make any changes to the target for the time being.

She said BNM would also keep the inflation target for 2023, as the headline and core inflation would likely moderate over the course of 2023, albeit remaining higher than pre-pandemic levels, averaging between 2.8 per cent to 3.8 per cent for the year.

"While pressure has eased in line with global commodity prices, core inflation will remain at elevated levels on firm demand conditions and continuing improvements in the labour market," she added.

The central bank chief said the outlook for inflation also accounts for the gradual rationalisation of subsidies, particularly the revision in electricity surcharge for selected industry participants.

In the first quarter, the headline inflation trended lower to 3.4 per cent, in line with moderating costs and supply conditions, while core inflation declined to 3.8 per cent but remained elevated, reflecting resilient domestic demand.

Meanwhile, commenting on whether she is interested in extending her contract as governor, which is set to expire next month, Nor Shamsiah said a formal announcement would be made in due course.

"The opportunity to serve the country is both a responsibility and privilege. So let's leave it at that," she said.

Nor Shamsiah was appointed as governor for a five-year term effective July 1, 2018 to June 30, 2023. She took over from Tan Sri Muhammad Ibrahim who resigned on June 15, 2018.

She was BNM deputy governor from 2010 to 2016.