Malaysia economic growth exceeds expectations in Q3 2023
Malaysia’s economy grew faster than predicted in the third quarter of 2023 (July-September) with the country’s central bank, Bank Negara Malaysia (BNM), expecting buoyant domestic demand to continue.
Gross domestic product grew by 3.3% from the same three-month period in 2022, according to data from BNM and the government’s Department of Statistics Malaysia (DoSM) – analysts had estimated for a 3% expansion.
Malaysia’s economic growth is expected to meet the government’s target of 4% this year, driven by strong domestic spending, improving labour market conditions and rising tourism, BNM Governor Abdul Rasheed Ghaffour said. “Malaysia’s economic fundamentals remain strong and supportive of growth moving forward,” he said. He added that GDP had exceeded pre-pandemic levels, and he estimated that the economy will grow by between 4% to 5% in 2024.
However, Malaysia also saw exports decline by 2% in the third quarter of this year, although the central bank expects a recovery driven a pickup in the tech cycle next year.
The central bank held its key interest rate unchanged at 3% in October amid moderating inflation, and warned of risks due to weaker-than-expected external demand and a fall-off in commodity production.
Headline inflation came in at 2% in the third quarter, and is expected to remain modest going into next year, Abdul Rasheed said.
He downplayed concerns about the ringgit currency , which has fallen around 6% against the U.S. dollar this year, one of the weakest performers in the region, saying it did not reflect strength in the economy.
Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia, said the economy “still had room to grow”. He said: “Tourist arrivals have yet to reach the pre-pandemic levels and the technology sector has been negative this year but expected to improve in 2024. All in all, I think next year’s growth projection of 4% to 5% is an attainable target.”
Wholesale and retail sales pick up
According to DoSM, Malaysia’s wholesale and retail trade recorded a sales value of RM142.7 bn (£24.3 bn), a 6.5% increase year-on-year in September 2023. It said sales value increased by just 0.1% on a month-on-month comparison.
Chief statistician Dr Mohd Uzir Mahidin said the increase was driven by the wholesale trade sub-sector, which rose 6.9% or RM4.1 billion to RM64.2 billion.
“Retail trade also expanded by registering 5.9% or RM3.4 billion to RM61.1 billion, followed by motor vehicles with an increase of 7% or RM1.1 billion to settle at RM17.5 billion,” he said in a statement.
Mohd Uzir said September’s marginal increase of 0.1% from the previous month was attributed to retail trade, which expanded 0.9% or RM500 million, followed by wholesale trade with 0.5% or RM300 million. “On the other hand, motor vehicles went down 3.6%,” he said.
He said the retail trade sector’s increase of 5.9% year-on-year in September was supported by retail sales in non-specialised stores, which grew 8.9% or RM1.9 billion to RM23.2 billion.
“The year-on-year growth of 7% for the motor vehicles sub-sector in September was fuelled by sales of motor vehicles parts and accessories, which accelerated 17.2% or RM700 million to record RM4.6 billion. This was followed by maintenance and repair of motor vehicles (18.6%) and sales of motor vehicles (3.8%).
- The Department of Statistics Malaysia has released its Business Tendency Statistics for the Fourth Quarter 2023, outlining predicted expectations for business performance for the three and six months ahead. The statistics are based on the Business Tendency Survey, which is conducted on a quarterly basis.
Commenting on the findings, Mohd Uzir said: “Businesses anticipate a better business situation in the fourth quarter of 2023, with a positive confidence indicator of 3.2%, up from 0.7% in the third quarter of 2023.”
He added that services, industry and construction are the three sectors that anticipate better business conditions in the fourth quarter of 2023.