Malaysia’s GDP growth likely slowed to 5.3 per cent in Q3, easing from 18-month high
The growth forecast signals a slowdown from the 5.9% pace recorded in Q2
[KUALA LUMPUR] Malaysia’s economy is projected to have expanded by 5.3 per cent in the third quarter from a year earlier, according to preliminary data released on Monday (Oct 21).
The growth forecast, although higher than the median prediction of 5.1 per cent in a Bloomberg survey, signals a slowdown from the 5.9 per cent pace recorded in Q2 – the fastest expansion in 18 months.
The deceleration comes as household spending, exports and investments have moderated. The final GDP figures will be unveiled on Nov 15.
Despite this, economists maintain a positive outlook and expect the gross domestic product growth to stay above 5 per cent for the full year.
Last week, the Malaysian government raised its 2024 growth outlook to a range of 4.8 to 5.3 per cent, from between 4 and 5 per cent previously, reflecting optimism about the country’s economic trajectory.
The latest data from the Department of Statistics Malaysia (DOSM) showed that the services sector continued leading the growth, at 5.1 per cent year on year. Manufacturing, construction and agriculture also recorded gains in Q3.
Conversely, the mining and quarrying sector contracted 3.4 per cent due to declines in natural gas and crude oil production.
From July to September, exports rose 7.8 per cent year on year, while imports grew nearly 21 per cent.
Mohd Uzir Mahidin, chief statistician of DOSM, noted that a stable labour market, moderate inflation, as well as supportive fiscal and monetary policies are underpinning growth, alongside a recovery in tourism and rising investments.
External demand remains strong
Chin Yee Sian, an economist at RHB Research, pointed out that the slower exports performance is not isolated to Malaysia. Asean countries in general recorded decelerations in exports growth in September.
“Nevertheless, the foundation for Malaysia’s exports remains robust for 2024, supported by resilient economic growth in major economies, a resurgence in the global technology cycle, as well as robust commodity prices,” she said in a note.
Meanwhile, MIDF Research anticipates the country’s economy to strengthen to 5 per cent this year, driven by increased domestic demand as consumers and businesses boost spending.
Domestic consumption driving growth
UOB economists Julia Goh and Loke Siew Ting project Malaysia’s GDP to reach 5.4 per cent this year, boosted by a low base effect and positive factors such as rising salaries, improving labour market conditions, as well as tourist spending.
“However, near-term growth risks may arise from external factors, including the uncertainties surrounding the US presidential election, escalating Middle East conflicts, and a slowdown in China’s economy despite recent stimulus measures,” they said in a note.
Hong Leong Investment Bank economists Felicia Ling and Nurul Athira Salith pointed out that the growth momentum of domestic consumption and industrial output remains robust, and will help to propel the country’s economic growth.
For the full year, Hong Leong Investment Bank expects Malaysia to achieve a GDP expansion of 5 per cent, in line with the Finance Ministry’s revised growth projection of between 4.8 and 5.3 per cent this year.
Ling and Nurul also noted that the services sector in Malaysia is set to grow on the back of increased tourism and sustained exports, while the manufacturing sector will keep expanding due to the rising demand for electrical and electronic products.
