KUALA LUMPUR (May 17): Malaysia’s economic growth accelerated faster than expected in the first three months of 2024, thanks to higher household spending, stronger investment activities, and improvement in tourist arrivals.
Gross domestic product grew 4.2% year-on-year (y-o-y) in January-March 2024 when compared to the same period in 2023, Bank Negara Malaysia announced on Friday. The reading is higher than the median estimate of 3.9% y-o-y growth in Bloomberg's survey of economists.
On a seasonally adjusted basis, GDP rose 1.4% quarter-on-quarter.
“Growth in 2024 will be driven by resilient domestic expenditure with additional support from the recovery in external demand,” Bank Negara Malaysia said in a statement.
“The growth outlook remains subject to downside risks stemming from weaker-than-expected external demand, further escalation of geopolitical conflicts and larger declines in commodity production domestically. Nonetheless, there are upside risks from greater spillover from the tech upcycle, more robust tourism activities and faster implementation of existing and new investment projects,” the central bank added.
In the final quarter of 2023, the economy expanded 3% y-o-y, undershooting forecasts.
On the demand side, private consumption rose 4.7% while private investment climbed 9.2%, data out earlier showed. Public consumption gained 7.3% and public investment was 11.5% higher. Net exports were down 24.5%.
On the supply side, the services sector — which accounts for more than half of Malaysia’s economic output — expanded 4.7%, and manufacturing activity advanced 1.9%. Mining production edged up 5.7% while the construction sector was 11.9% higher.
The government forecasts the economy to pick up pace to 4%-5% this year, from 3.7% last year, on the back of export recovery and higher tourist arrivals to bolster consumer spending and business investments.