How to read the GDP Data for Q4-2022

FRIDAY, 10 February 2023: The Malaysian economy grew 8.7% in 2022, the highest recorded in 22 years, according to Bank Negara Malaysia (BNM). The Center for Market Education (CME) invites to read these data with prudence, at the light of the peculiar years in which Malaysia experienced the Great Lockdown (2020-2021). «We have to avoid euphoria for the stellar performance, but also restrain from panic about the contraction which is about to come», said Dr Carmelo Ferlito, CME CEO.

In order to get the right perspective about the 2022 economic growth, CME invites to compare the latest data with the pre-pandemic situation.

The table above tells us that, if GDP 2019 = 100, at the end of 2021 the size of the Malaysian economy was still below the pre-pandemic level, while at the end of 2022 it was equal to 105.91, or it was 5.91% bigger than it was before the Great Lockdown. This means that, over the past three years combined, the Malaysian economy grew at a rate just slightly higher than what was used to be the normal annual growth rate before the pandemic: as it was to be expected, during the biennium 2020-2021, income was destroyed. Furthermore, the average yearly growth rate between 2020 and 2022 was 1.97%.

CME also invites to look at the quarter-to-quarter GDP performances reported by BNM, which can be found on the red line in the graph below.

The situation which emerges is the one described by CME in the paper Inflation, Unemployment and COVID-19 Policies: Where Is The Malaysian Economy Heading?, authored by Carmelo Ferlito, Fariq Sazuki and Abel Benjamin Lim, and published in 2021 ( The three authors where foreseeing, as consequence of lockdowns and expansive fiscal and monetary policies, a post-Covid rebound and after that a post-Covid inflation-led economic contraction. The red line, indeed, shows a gradual slowdown of the economy during 2022, with quarterly growth rates gradually decreasing, up to reaching the negative performance (-2.6%) of the last quarter.

This means that economic growth is already showing signs of cooling down, and this comes mainly from a slowdown in private consumption, while investments seem to decelerate at a slower pace.

According to CME, with the economic contraction ahead, this can be an occasion to build a different model of (sustainable) economic growth, centred on savings and investments, rather than private consumption and government spending. «We believe that savings and investments are the pillars for sustainable economic growth, while an economic model built on consumption and government spending is incentivizing debt and inflation», noted Dr Ferlito.

With still a high degree of global uncertainty and a domestic policy scenario yet to be defined, the Center for Market Education invites to take initiatives going in the following direction:

  • Promoting financial literacy for more informed financial decisions (preserving the financial stability of the rakyat);
  • Doing whatever is possible to ease doing business in terms of general regulations, banking structure and labour legislation, so to incentivize both domestic and foreign investments;
  • Promoting a fiscal reform that, while aiming at reducing income tax, strengthens enforcement and introduces a new Good and Service Tax (GST);
  • Strengthening international free trade with straightforward and easy-to-implement bilateral agreements.

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About CME: The Center for Market Education (CME) is a boutique think-tank based in Kuala Lumpur, Malaysia.

As an academic and educational institution, CME aims to promote a more pluralistic and multidisciplinary approach to economics and to spread the knowledge of a sounder economics, grounded in the understanding of market forces.

In order to do so, CME is not only involved in academic initiatives, but it organizes seminars, webinars and tailor-made economics classes for students, journalists, businesspeople and professionals who wish to better understand the relevance of economics for their daily lives and activities.

Economics matters and needs to be presented in a fashion in which the link with reality is clearly visible. In this sense, we look not only at theoretical economics but also at policy making, with an emphasis on the unintended consequences generated by political actions. Visit