The central bank said economic growth was “particularly robust” in April and May, thanks to strengthened domestic demand, the steady recovery in labour market conditions, and policy support.
“The higher growth was also reflective of normalising economic activity as the country moved towards endemicity and reopened international borders,” it said.
The services and manufacturing sectors continued to drive economic growth, while demand for electrical and electronics (E&E) products kept export figures strong.
In a statement, BNM said this meant that the economy had grown 6.9% in the first half of the year, and was forecast to grow further the rest of 2022.
BNM governor Nor Shamsiah Mohd Yunus said external demand could drop because of slower global growth, but the economy would continue to be backed by strong local demand.
“Growth would also benefit from improving labour market conditions and higher tourist arrivals, as well as continued implementation of multi-year investment projects,” she said.
However, the central bank noted that Malaysia’s growth was susceptible to factors like weaker global growth, a further escalation of geopolitical tensions, and greater supply chain disruptions.
BNM said headline and core inflation went up to 2.8% and 2.5%, respectively, in the second quarter, adding that price increases were mainly driven by food away from home and other food items.
Headline inflation was expected to rise the rest of the year, partially due to the base effect from the discount on electricity prices implemented in the third quarter of last year.
“Core inflation is expected to average higher in 2022, as demand continues to improve amid the high-cost environment,” it said.
“The extent of upside pressures on inflation is expected to remain partly contained by existing price control measures, fuel subsidies and the continued spare capacity in the economy.
“Nevertheless, the inflation outlook continues to be contingent on upside risks stemming from the strength of domestic demand, global price developments, and domestic policy measures.”
BNM said loan disbursements remained strong amid high loan demand, especially to purchase cars and houses.
It said loan repayments for business and household segments had been “encouraging” following the economy’s reopening and the expiry of repayment assistance programmes.
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