Malaysian economy grows by 4.2% in first quarter of 2024
The Malaysian economy grew by 4.2% in the first quarter of 2024, driven by an increase in consumer spending and an upturn in the export market, according to the country’s central bank. The figure was an increase on the fourth quarter of 2023, which saw recorded growth of 2.9%.
The latest figures from the country’s central bank, Bank Negara Malaysia, showed that household spending was higher thanks to continued growth in employment and wages. Better investment activities were supported by higher capital spending by both the private and public sectors, it reported.
Exports rebounded as demand from overseas grew, the bank said. The manufacturing sector was lifted by a rebound across both the electrical and electronic (E&E) and non-E&E industries. Stronger growth in the services sector was driven by higher retail trade activities and continued support from the transport and storage subsector.
The central bank said headline inflation remained moderate at 1.7% during the quarter (4Q 2023 – 1.6%).
Core inflation moderated to 1.8% (4Q 2023: 2%), largely driven by continued easing in the food and beverages segment. The share of Consumer Price Index (CPI) items recording monthly price increases rose to 44.2% during the quarter (4Q 2023 – 36.3%). Nonetheless, this remains well below the first quarter long-term average (corresponding first quarter periods during 2011-2019) of 52.2%.
Bank Negara Malaysia’s report said: “Malaysia’s economic growth to be underpinned by resilient domestic expenditure and improvement in external demand.
“Growth in 2024 will be driven by resilient domestic expenditure with additional support from the recovery in external demand. On the domestic front, continued employment and wage growth will support household spending. Improvement in tourist arrivals and spending are expected to continue. Investment activities will be driven by progress in multi-year projects across private and public sectors, alongside catalytic initiatives announced in national master plans, as well as the higher realisation of approved investments.”
It added: “The growth outlook remains subject to downside risks stemming from weaker-than-expected external demand, further escalation in geopolitical conflicts and larger declines in commodity production domestically.
“Nonetheless, there are upside risks from greater spillover from the tech upcycle, more robust tourism activities and faster implementation of existing and new investment projects.”
Government to invest in Islamic finance initiatives
The Malaysian government has reaffirmed its commitment to Islamic finance innovation by committing RM100 million (£16.7m) to fund development partnerships in the sector.
Prime Minister Anwar Ibrahim, who is also the Finance Minister, has announced two new blended finance innovations – a pilot programme on improving the sustainability of halal businesses, and ‘Project Hassan’.
The halal businesses pilot programme is a collaboration between the Islamic Development Bank (IsDB), the Ministry of Finance, Bank Negara Malaysia (BNM) and the World Bank.
Anwar said the programme aims to assist halal businesses in Malaysia in transitioning to more green and sustainable practices by building tools to measure and report greenhouse gas emissions.
Meanwhile, Project Hassan is a collaboration between Lembaga Zakat Negeri Kedah, MIFC Leadership Council (MLC), the Association of Islamic Banking and Financial Institutions Malaysia and INCEIF University, aimed at boosting charitable giving initiatives (‘zakat’) to elevate the socio-economic conditions of those eligible to receive it (‘asnaf’). Zakat it is one of the pillars of the Islamic faith requiring all Muslims to donate a portion of their wealth to charity.
The prime minister said he welcomed more initiatives in Islamic finance which will broaden the economic horizon and create diverse opportunities for small and medium businesses as well as underprivileged individuals.
“Transformation is not only about addressing gaps, it is also about embracing and adapting to the future,” he said.
Furthermore, Anwar noted that achieving Shariah compliance in digital assets and smart contracts is not enough. “We must ensure that these technologies are developed and implemented in such a way as to empower our people, create greater unity and cohesiveness among our countries and give us greater freedom to build sustainable and resilient societies,” he added.
