Malaysia’s economy likely expanded 5.8% in Q2, show advance estimates

[KUALA LUMPUR] Malaysia’s economy is expected to expand by 5.8 per cent in the second quarter of 2024 from a year earlier, driven by service, manufacturing and agriculture sectors, official advance estimates from the Statistics Department (DOSM) showed on Friday (Jul 19).

The projected growth is higher than the first quarter’s GDP growth of 4.2 per cent year on year (yoy), and more than economists’ forecasts.

AmBank Group earlier projected the country’s economy to grow by 5.3 per cent in Q2 this year amid sustained domestic demand and better exports. MIDF Research, meanwhile, forecasts Q2 GDP to expand by 4.7 per cent.

With this, DOSM expects Malaysia’s economy for the first six months of 2024 to grow at 5 per cent, from 4.1 per cent in the same period in 2023.

Malaysia’s chief statistician Mohd Uzir Mahidin said that all key sectors continued to expand in Q2, led by the agriculture sector with 7.1 per cent yoy growth (from 1.6 per cent in Q1), supported by oil palm and livestock sub-sectors.

From March to June, the services sector grew 5.6 per cent yoy (from 4.7 per cent in Q1). The manufacturing sector recorded 4.7 per cent yoy growth in Q2, higher than 1.9 per cent in the previous quarter.

The forecast would mean that for the first half of 2024, GDP grew by 5 per cent compared with 4.1 per cent in the same period last year.

Malaysia’s advance GDP estimates expanded by 5.8 per cent in Q2 2024, from 4.2 per cent in the preceding quarter, bolstered by growth in services, manufacturing and agriculture sectors.

Economists expressed confidence in the continued expansion of macro earnings in upcoming quarters. This optimism is underpinned by gradual enhancement of the external sector and the resilience of the labour market.

Alexander Chia, head of regional equity research at RHB Investment Bank, anticipates that the country’s growth momentum will remain strong, supported by both external and internal factors. Recent improvements in business indicators have bolstered domestic confidence, which is expected to drive increased investment spending in the upcoming quarters, he added.

RHB Investment Bank projects Malaysia’s GDP to expand by 4.6 per cent yoy for the full year of 2024. “This growth is underpinned by the resurgence in the global technology cycle and enhanced economic conditions across the region,” Chia said in a report.

MIDF Research forecasts the economy to expand at 4.7 per cent this year, anticipating domestic spending activities to continue growing on the back of positive labour market conditions, improving wage conditions and improving foreign tourist arrivals.

Nevertheless, the research firm is also cautious of potential risks that may impact the growth outlook. These include heightened geopolitical and trade tensions, weaker-than-expected growth in China and the United States, and reduced demand for exports from major markets.

Latest data showed that exports expanded modestly at 1.7 per cent yoy in June to RM126 billion (S$36 billion), slower than May’s 7.3 per cent and below economists’ forecast of 4.6 per cent.