Malaysia left its benchmark interest rate unchanged on Thursday, maintaining support for the economy amid slowing exports and shrinking factory output.

Bank Negara Malaysia kept the overnight policy rate at 3% at its first monetary policy meeting on Thursday with Governor Shaik Abdul Rasheed Abdul Ghaffour at the helm. The decision was seen by all but one of the 18 analysts in a Bloomberg survey.

“The monetary policy stance is slightly accommodative and remains supportive of the economy,” the BNM said in a statement. It noted that both headline and core inflation measures will trend lower in the second half of 2023.

The pause gives policymakers time to assess the impact of the global slowdown on the trade-reliant economy. Weakening external demand is already weighing on the manufacturing sector, with Malaysia’s industrial output shrinking for the first time in nearly two years in April. The country also saw a third straight month of export contraction in May, albeit at a slower-than-expected rate.

Global growth remains weighed down by persistent core inflation and higher interest rates, the central bank said, while noting that China’s pace of recovery has slowed in recent months. The BNM sees domestic growth being driven by resilient domestic demand for the remainder of the year, helped by improving tourism and steady investment flows.

--With assistance from Tomoko Sato and Cecilia Yap.