KUALA LUMPUR (Nov 15): Malaysia’s economic growth decelerated in the third quarter as expected though the pace remained brisk, thanks to resilient investments, higher exports and expansion in household spending.
Gross domestic product (GDP) grew 5.3% year-on-year in July-September (3Q2024), according to Bank Negara Malaysia (BNM). The reading matches the median 5.3% increase predicted in a Bloomberg poll of economists, but a tad slower than the 5.9% year-on-year growth in the second quarter.
On a seasonally adjusted basis, GDP rose 1.8% quarter-on-quarter.
“Malaysia’s latest leading indicators suggest further improvement of the overall economy,” BNM governor Datuk Seri Abdul Rasheed Ghaffour said at a press conference in conjunction with the data’s release. The economy is on track for full-year growth of 4.8-5.3% in 2024, he noted.
Going to 2025, BNM expects the economy to expand 4.8%-5.3%.
“This is to be driven by household spending, which will remain the anchor of growth, driven by expansion in employment and income, as well as continued policy support,” Abdul Rasheed said.
Furthermore, investment activities will continue to support growth amid ongoing progress in multi-year projects, and realisation of high approved investments, the governor said.
Externally, the ongoing global tech upcycle, continued strong demand for manufactured goods and commodities, and higher tourist spending are expected to lift exports, the central bank governor added.
In the third quarter, private consumption was up 4.8%, while private investment climbed 15.5%. Public consumption rose 4.9%, while public investment gained 14.4%. Exports on a net basis, however, dropped 8.8% due to stronger intermediate and capital imports.
On the supply side, the services sector — which accounted for half of the economic output — expanded 5.2%, while manufacturing activity advanced 5.6%. The construction sector was up 19.9%, while mining production dropped 3.9%.
“This was supported by stronger expansion in investment activities, higher goods and services exports, as well as expansion in household spending,” Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Mohd Uzir Mahidin said at the same briefing.
“Positive labour market conditions and also the implementation of new policies such as the new public service remuneration system and progressive wage,” also provided some boost, he said.
Inflation forecasts unchanged
On inflation, BNM’s projections remained unchanged at 1.5%-2.5% for 2024, before picking up to 2.0%-3.5% in 2025.
The key risks to 2025’s projection include potential changes to domestic subsidy policies, global commodity prices, and supply chain disruptions, according to Abdul Rasheed.
Both headline and core inflation stood flat at 1.9% in 3Q2024, unchanged from the previous quarter.
The government has announced its intention to rationalise the subsidy for the widely-used RON95 petrol, which takes up the largest chunk of the bill. The plan calls for a two-tier pricing system, supplemented by cash transfers.