Capital Market Review & Outlook

The global economy experienced considerable challenges in 2022 shaped by the war in Ukraine, intensified global inflationary pressures, tightening global financial conditions, and an economic slowdown in China. Domestically, the Malaysian economy remained resilient and continued to recover following the reopening of the economy, underpinned by robust domestic demand. Against the backdrop of higher global financial market volatility, conditions in the domestic capital market remained orderly and it continued to play its critical role in financing economic activity and mobilising savings, with a notable improvement in fundraising activities in 2022. Going forward, the Malaysian economy is projected to continue to recover in 2023, although at a more moderate pace, given the increasingly challenging global economic environment. The domestic capital market will continue to be influenced by key global developments and is expected to stay resilient and orderly, given Malaysia’s firm macroeconomic fundamentals and supportive policy environment.

The global economy faced a series of destabilising shocks in 2022, derailing global economic recovery. The path towards recovery was upended primarily by the war in Ukraine, which led to prolonged supply-chain imbalances, commodity price shocks, an energy crisis in Europe, and multi-decades high inflation across most advanced economies.

The Malaysian economy recovered strongly in 2022, despite an increasingly challenging external environment. Growth was underpinned by favourable domestic demand momentum, steady expansion in the external sector, and continued improvement in labour market conditions.

Global economic growth is expected to slow further in 2023, subject to considerable uncertainties. Aside from ongoing concerns related to the pandemic, especially in China, the interplay between geopolitical fragmentation, elevated inflationary pressure, and the pace of monetary policy normalisation in major economies will be key determinants of the pace of global economic activities.

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