Page 22 - SC SCAR 2023 ENGLISH Flipbook

PART 1 CAPITAL MARKET REVIEW AND OUTLOOK
PART 1
capital market review and outlook
OVERVIEW
The global economic landscape continued to experience considerable challenges in 2023, marked by persistent divergence in global growth and monetary policy expectations, coupled with escalating geopolitical tensions that contributed to overall volatility in global financial markets. Domestically, growth of the Malaysian economy moderated but remained resilient, underpinned by sturdy domestic demand. Against the backdrop of heightened global challenges, the Malaysian capital market stayed orderly and continued to function effectively in financing economic activity and intermediating savings. Going forward, the Malaysian economy is expected to remain on a steady growth path in 2024, driven by continued private sector spending. Meanwhile, the domestic capital market is expected to remain stable, fair, and orderly, backed by sound economic fundamentals, ample domestic liquidity, and a supportive policy environment.
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SECURITIES COMMISSION MALAYSIA ANNUAL REPORT 2023
GLOBAL DEVELOPMENTS IN 2023
The global economy continued to experience considerable challenges and macroeconomic divergences. While remaining resilient, global economic growth momentum has moderated and is uneven across countries and regions amid the ongoing impact of tighter global monetary conditions, persistent underlying inflationary pressures, as well as heightened geopolitical uncertainty and geoeconomic fragmentation. Despite easing inflationary trends, core price pressures remain elevated, prompting major central banks to reaffirm their commitment to containing inflation until it falls durably within the target range.
Although moderating in momentum, global growth surpassed initial expectations as optimism arose from developments such as a stronger-than-expected United States (US) economy, an easing energy crisis in Europe, and China’s economic reopening post-pandemic.
Despite an ongoing contraction in manufacturing activity – reflecting weaker global demand conditions – services activity remained resilient, alongside historically tight labour markets. Swift policy action by the US and European authorities also served to restore market confidence after banking turmoil earlier in the year, given the impact of tighter financing conditions.
Meanwhile, China’s economic growth showed signs of early recovery following its exit from zero-COVID policies, but momentum dwindled, hampered by ongoing stress in the real estate market, growing corporate debt risks and weakening confidence, which continues to weigh on global economic activity. The International Monetary Fund (IMF) in its World Economic Outlook report in October 2023 forecasted global growth to slow to 3% in 2023 from 3.5% in 2022, with growing regional divergences. However, Asia Pacific is expected to remain as a global growth driver, with the IMF forecasting growth in the region to accelerate to 4.6% in 2023, from 3.9% in 2022.