Malaysia’s economic growth may slow to 4.8% in Q4, below forecast
The deceleration is attributed to moderated growth in manufacturing and construction activities
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[KUALA LUMPUR] Malaysia’s economy is projected to expand by 4.8 per cent year on year (yoy) in the fourth quarter of 2024, according to preliminary data released on Friday (Jan 17).
The growth forecast is lower than the 5.1 per cent median rise predicted in a Bloomberg survey, indicating a slowdown from the 5.3 per cent growth in Q3.
The deceleration is attributed to moderated growth in manufacturing and construction activities.
For the full year of 2024, the country’s gross domestic product growth is expected to expand by 5.1 per cent, compared with the 3.6 per cent increase in 2023.
The estimate is within economists’ forecasts ranging from 4.2 to 5.5 per cent.
Last week, Malaysia Finance Minister II Amir Hamzah Azizan expressed optimism about the country’s economic performance, predicting steady growth above 5 per cent in 2024.
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The final GDP figures will be unveiled on Feb 14.
Services sector leads growth
The latest data from the Department of Statistics Malaysia (DOSM) indicates that the services sector continued to lead growth in Q4, rising 5.3 per cent yoy. It was driven by the wholesale and retail trade, transportation and storage, as well as information and communication sub-sectors.
Manufacturing growth moderated to 4.3 per cent yoy, down from 5.6 per cent in the previous quarter, mainly supported by electrical, electronic and optical products, along with petroleum, chemical, rubber and plastic products.
Construction activities increased by 19.6 per cent, with strong growth in both the residential and non-residential segments, compared with a nearly 20 per cent rise in Q3.
Conversely, the mining and quarrying sector contracted 1.4 per cent, while agriculture declined 0.6 per cent yoy.
On the external front, Malaysia’s trade remained robust in November, achieving a growth of 4.1 per cent in exports and 1.6 per cent in imports.
Mohd Uzir Mahidin, chief statistician of DOSM, said that strong domestic demand and recovering external factors were supporting economic growth, alongside strategic investments in renewable energy and digital infrastructure.
“Additionally, recent increases in tourist arrivals and civil servant pay are expected to further boost household spending and retail activity,” he said in a statement on Friday.
2025 outlook
Economists generally maintain an optimistic outlook for Malaysia’s economic growth in 2025, with forecasts ranging from 4.5 to 5 per cent.
Chin Yee Sian, an economist at RHB Research, highlighted that ongoing multi-year infrastructure projects, rising household incomes and easing global monetary conditions are a major push for the economy.
“We have observed a rise in structural investment and continued growth in machinery and equipment spending, indicating signs of optimism,” she said in a report, noting that the bank maintained its GDP forecasts of 5.1 per cent for 2024 and 5 per cent for 2025.
OCBC also retained its 2025 GDP growth forecast at 4.5 per cent, supported by solid domestic demand support and resilient – albeit moderating – export growth.
OCBC senior Asean economist Lavanya Venkateswaran noted that the strength in household and investment spending will likely persist into 2025 while electrical and electronic export growth remains strong, but may moderate compared with 2024 levels.
“We will keep underlying inflationary pressures in check. The impending RON95 petrol subsidy rationalisation may potentially push headline inflation higher to an average 2.7 per cent yoy in 2025, compared to 1.8 per cent in 2024,” she added.
MIDF Research has also maintained its 2025 GDP growth forecast at 4.6 per cent, mainly supported by resilient domestic demand.
“A more robust growth in the domestic economy will help Malaysia navigate external uncertainties such as ongoing geopolitical and protectionist trade policies that could negatively impact international trade,” said MIDF.
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