After recording better-than-expected growth in the first quarter , Malaysia's economic outlook continues to face uncertainty following fiscal consolidation and China's weak recovery.
According to a note issued on Friday, CGS-CIMB Research expects the government to pursue some form of fiscal consolidation, where the remainder of the Covid-19 stimulus is withdrawn.
In addition, analysts also see that China's slow recovery could affect Malaysia's growth prospects.
In the first quarter of this year, one of the factors driving the country's growth was the steady arrival of Chinese tourists since the reopening of its borders.
However, Beijing is still struggling with a slow economy and structural problems in the real estate market.
It is seen not only as a gloomy prospect for the country's growth, but also for the global as a whole.
The impact may be seen on gross domestic product (GDP) growth in the second and third quarters of 2023.
CGS-CIMB however maintained its 2023 GDP forecast to grow by 4.4% year-on-year, while also seeing the potential for an increase if the momentum of private consumption remains resilient.
Meanwhile, Hong Leong Investment Bank (HLIB) Research, the economy will continue to experience pressure from continued inflation risks, slower global growth and tighter global credit conditions.
Last week, Bank Negara Malaysia announced the country grew by 5.6% in the first quarter, beating Reuters' expectations for 4.8% growth after being driven by household spending, continued investment activity and increased foreign tourist arrivals.
