Malaysia’s GDP grew 3.3% in the third quarter of the year (Q3 2023) anchored by domestic demand as the global conditions remained weak and volatile.
This brought growth in the nine months of 2023 to 3.9% and is consistent with the government’s growth forecast of approximately 4% for 2023.
Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, said domestic demand soared by 4.8% in Q3 2023, with the resilient labour market and an improving tourism sector lending further support.
“In terms of supply, the Malaysian economy’s growth was propelled by expansion in the services (5%), agriculture (0.8%) and construction
(7.2%) sectors.
“Offsetting these growths were minor contractions in the manufacturing (0.1%) and mining and quarrying (0.1%) sectors. Meanwhile, total trade contracted by 15.7% to RM653.3 billion,” he said.
Anwar said the dynamic domestic demand reflects the Madani government’s ongoing efforts to restore Malaysian economy.
“The early stages of fiscal reforms undertaken by the government has already generated savings and higher revenue that are being redistributed to the rakyat directly or indirectly,” he said.
The labour market, he said continued to improve, with the unemployment rate declining to 3.4% in Q3 2023, down by 1.4% of unemployed persons from the preceding quarter.
“Inflation on the other hand moderated to 2% from 2.8% in Q2 2023, aided by the government’s consumption subsidies to temper services and food price increases,” he added.
Nevertheless, the prime minister said geopolitical tensions have set a domino effect following a long disruption in the global supply chains and increased global interest rates.
“(This caused) in a slump in external demand, exposing the country’s economy to downside risks that could linger for the medium-term,” he said.
“Efforts to rein in these downside risks come from the government’s ongoing initiatives to rope in high-value foreign direct investments (FDI). In Q3 2023, net FDI more than doubled from the preceding quarter to RM7.2 billion from RM3.1 billion,” he said, adding financial, insurance and takaful activities are among the sectors attracting FDI.
“Going forward, more efforts will be mobilised to attract FDI in the high-value manufacturing sector, particularly for E&E, petrochemicals and renewable energy.”
In September 2023, Malaysia’s Consumer Price Index (CPI) growth of 1.9% was far more benign than selected advanced economies and regional countries such as the UK (6.7%), the Philippines (6.1%), Singapore (4.1%), the US (3.7%) and Indonesia (2.3%).
Aside from domestic market, electrical and electronics (E&E) industry is recovering, to provide relief to the export market in Q4 2023.
Anwar added the government will further implement economic reforms as mapped out in “Ekonomi Madani: Memperkasa Rakyat” framework and other key policies.
“While the Government will continue to taper the fiscal deficit from 5% in 2023 to 4.3% in 2024, it remains steadfast with a expansionary fiscal policy stance to support Malaysia’s economic growth and ease the rakyat’s cost-of-living burden.
“The steady performance in Q3 2023 sets a strong signal for a positive trajectory for Malaysia to achieve economic resilience and support the restructuring of the economy,” added Anwar.
