The bank’s research unit has claimed that the recession fears were “over-done” when offering the contrarian view in its global economic and market strategy report released today.

It expressed cautious optimism on the outlook for Malaysia in 2023, citing resilient domestic demand and private consumption as the main drivers of economic growth.

However, it did not discount the possibility that there were external headwinds that could put pressure on the Malaysian economy.

At home, it said, the limited fiscal space, elevated cost of living and the shortage of labour are likely to persist in 2023.

Across the causeway, the investment bank said, easing exports and a deterioration of the global economic conditions could retard the growth momentum going into the first half of 2023 (H1 2023).

On the other hand, it said, Thailand could see a boom in its tourism sector as China begins to reopen its borders, but it remains cautious on Indonesia based on its view that the inflation rate could remain elevated amid moderating commodity prices.

On the whole, it said, gross domestic product growth in Southeast Asia would slow down in H1 2023 before it recovers in the second half of the year.

It said real exports would decline with a deceleration of private consumption growth in the US in the first half but a recovery is expected in the second half.

The research house also sees the beginnings of a bull run in the US markets and a depreciation of the US dollar against Asian currencies from the second to fourth quarters of 2023 (Q2 to Q4 2023).

It also expects the Dow Jones Industrial Average index to make a 10% to 15% gain in 2023.