Malaysia struggles to grow due to El Niño

Malaysia’s economic growth in the second quarter was the lowest in nearly two years due to falling exports and a slowing global economy, prompting the country’s central bank to warn that full-year growth would be below its previous forecast.

The Q2 annual growth came in at 2.9%, central bank data showed. The growth rate was the slowest since 2021.

“The weak external demand is expected to weigh on near-term growth. The economy is facing downside risks stemming from weaker-than-expected global growth and a deeper or longer-than-expected technology downcycle,” Governor Abdul Rasheed Ghaffour said at a news conference.

While he does not expect a global recession, the governor believes global economic growth will be below the long-term average.

Malaysia, one of the world’s largest exporters of palm oil and liquefied natural gas, also suffer in commodity production due to El Niño and prolonged plant maintenance, Abdul Rashid noted.

El Niño is a natural phenomenon that causes warming of the Pacific Ocean and, as a consequence, has a significant impact on the planet’s climate. During this period, waves of intense heat waves, heavy rains, droughts, and other anomalies are recorded.