Malaysian economy robust

17 May 2024

By AVV

KUALA LUMPUR: The Malaysian economy in the first quarter of 2024 (Q1 2024) expanded by 4.2% (Q4 2023: 2.9%), driven by the recovery in export performance and robust domestic demand.

The growth rate in Q1 2024 exceeded the Bloomberg consensus forecast of 3.9%, and the Government is optimistic that Malaysia's Gross Domestic Product (GDP) is in a good position and is expected to grow at an official forecast rate of between 4% and 5% for the year 2024.

Dato' Seri Anwar Ibrahim, the Prime Minister and Minister of Finance, stated that the impressive economic performance of the country in Q1 2024 proves that effective government policies and sound economic management have fueled growth.

"Despite global economic uncertainties, Malaysia's economic performance continues to strengthen. In the first year of administration, the MADANI Government has initiated comprehensive policy reforms and is committed to implementing a reform agenda to transform the economy and enhance public service delivery," he said.

"The Government is determined to ensure the successful implementation of the MADANI Economic framework. The increased confidence in the domestic capital market can be seen through the recent record levels of the FBM KLCI, reflecting renewed interest from global investors in Malaysia's reform narrative," added the Right Honourable Dato' Seri Anwar.

From the supply side, all sectors surged, driving economic growth in Q1 2024.

This can be observed through encouraging economic fundamentals, including:

• The labor market maintaining its positive momentum with an increase of 2.1% in the number of employees to 16.4 million people. More than 50,000 new jobs have been created, contributing to a low unemployment rate of 3.3%.

Achievements

Stable wages and salaries continue to be impressive with the services sector recording a growth of 3.3% and manufacturing 1.2%.

• The inflation rate remains low at 1.7%, compared to 1.6% in Q4 2023.

• The Industrial Production Index (IPI) increased by 3.3% in Q1 2024 (Q4 2023: 0.8%), supported by positive momentum in all subsectors driven by electricity (8.9%); mining (5.9%); and manufacturing (2.1%).

• The construction work value recorded double-digit growth of 14.2% totaling RM36.8 billion in Q1 2024 (Q4 2023: 6.8%; RM34.1 billion). This increase was driven by growth in all subsectors led by civil engineering (24.7%); special construction activities (11.8%); and residential buildings (11.5%).

• From an external sector perspective, Malaysia's trade volume grew by 7.1% to RM690.6 billion, supported by a 2.2% increase in gross exports to RM362.4 billion and a 13.1% increase in gross imports to RM328.2 billion.

Malaysia continues to record a trade surplus amounting to RM34.2 billion in Q1 2024.

• The current account in the Balance of Payments registered a surplus of RM16.2 billion or 3.6% of Gross National Income (Q4 2023: 0.2%; RM0.9 billion), contributed by surpluses in the goods account and higher tourist arrivals.

Net foreign direct investment (FDI) amounted to RM5.5 billion (Q4 2023: RM19.6 billion), particularly from Hong Kong, the United States, Germany, the Cayman Islands, and Bermuda.

This FDI was channeled into the mining and quarrying sector; the communication and information sector; as well as financial and insurance/takaful activities.

The increasing economic momentum reflects a strong national foundation and investor confidence in the domestic economy, further enhanced by the precise policies of the MADANI Government.

The MADANI Economic Framework, which maps out a powerful strategy for Malaysia's economic growth and identifies emerging growth industries, has begun to yield positive results for the continuous development of the country's economy.

This growth is also driven by the economic measures outlined in the Second MADANI Budget (2024) and the Government's commitment to prudent financial management while ensuring the well-being of vulnerable groups is continuously safeguarded.

Furthermore, the implementation of strategies and initiatives under the National Energy Transition Roadmap, the New Industrial Master Plan 2030, and initiatives of the 12th Malaysia Plan continue to attract high-value investments in high value-added industries, thereby creating high-income jobs that enhance the quality of life for the people.

Moving forward, efforts will be intensified to improve public service delivery and boost productivity. These efforts aim to ensure that economic development policies are implemented as planned to achieve the nation's aspirations.