Malaysia's palm oil board on Monday (Nov 14) warned of a tough 2023 for the market for the world's most consumed edible oil, with the persistence of global uncertainties in weather, geopolitics and economics that have caused wide price swings this year.
The edible oils market has grappled with volatility triggered by recession fears, Russia's invasion of Ukraine and governments' curbing exports to protect domestic food supplies.
Malaysia's benchmark crude palm oil prices reached a record high of RM7,268 a tonne in March, but prices have tumbled by about 40% since. The "palm oil situation is expected to remain uncertain in 2023," Malaysian Palm Oil Board director general Datuk Dr Ahmad Parveez Ghulam Kadir said in a presentation to an online seminar.
Services, Manufacturing Growth Set to Continue
Malaysia’s services and manufacturing growth, the big factor behind the country’s strong third-quarter (3Q) gross domestic product print, is projected to continue in 2023.
Moody’s Analytics, in its latest Asia Pacific Economic Preview report, said the stronger year-on-year growth of 14.2% in 3Q exceeded expectations, with consumption and investment contributing significantly to the growth.
It said the influx of tourists pushed up demand for the retail trade, accommodation, and food and beverage sectors, and growth in these industries will likely be carried into early 2023.
Exports of manufacturing products stayed resilient, despite the downturn in China, with growth to remain robust next year, said Moody’s Analytics.
Growth to Lose Momentum - More Volatility?
Fitch Solutions Country Risk and Industry Research has raised its forecast for Malaysia’s real gross domestic product (GDP) growth to 8.4% in 2022, from 5.9% previously, after the economy expanded by an average of 9.4% year-on-year (y-o-y) in the first three quarters of the year. In a report last Friday (Nov 11), the firm, however, kept its 2023 growth forecast unchanged at 4%.
“Over the coming quarters, we expect that tightening monetary conditions, fading base effects and pent-up demand, as well as a slowing global growth environment will weigh on Malaysia’s economic growth momentum,” it says.
Fitch Solutions said Malaysia’s real GDP growth came in at 14.2% y-o-y in the third quarter of 2022 (3Q2022), up from 8.9% in 2Q2022, boosted by strong private consumption and investment, robust exports, and favourable base effects.