KUCHING: Malaysia’s economy grew by 3 per cent in Q4 2023, marking a continuation of its steady expansion, with Q3 growth at 3.3 per cent and Q2 at 2.9 per cent.
Bank Negara Malaysia (BNM) attributed this growth to robust household spending supported by improved labour market conditions and easing cost pressures.
The unemployment rate returned to pre-pandemic levels at 3.3 per cent, and the labour force participation rate hit a record high in 2023.
“Investment activity has been a key driver, fuelled by the ongoing realisation of multi-year projects and capacity expansions by firms. Despite an increase in imports, exports faced challenges due to a persistent weakness in external demand,” BNM said in a statement.
The central bank also noted growth in the oil and gas production and agriculture sectors, thanks to an improved labour supply. While the services and construction sectors expanded, manufacturing lagged, mainly due to the electrical and electronics industry’s struggles.
December saw a 1.4 per cent monthly Gross Domestic Product (GDP) growth, a slowdown attributed to a shorter school holiday period and a weaker export-oriented manufacturing sector. Despite a slowdown from 2022’s 8.7 per cent growth, 2023’s 3.7 per cent growth is considered respectable amidst global challenges.
The challenges to growth included slower global trade, geopolitical tensions, and tighter monetary policies.
“Malaysia has maintained a strong external position, with a 1.2 per cent GDP current account surplus in 2023, bolstered by diverse exports,” it added.
Q4 2023 saw headline inflation drop to 1.6 per cent, thanks to lower fresh food and core inflation, with the latter benefiting from reduced costs in services like dining out and personal transport maintenance.
The ringgit appreciated by 2.1 per cent against the US dollar in Q4, mirroring regional trends after a widespread US dollar depreciation. BNM committed to ensuring market liquidity for orderly domestic foreign exchange market operations.
For this year, BNM anticipates economic improvement, driven by domestic spending and a rebound in external demand.
“Inflation is projected to stay modest, influenced by stable costs and demand, though risks from policy changes, global commodity prices, and financial market shifts remain,” it said.
BNM will release its Annual Report 2023, the Economic and Monetary Review 2023, and the Financial Stability Review for the Second Half of 2023 on March 20.
