Malaysia’s economy grew at a steady pace in the fourth quarter as an increase in private consumption offset a fall in exports, according to economists in a Reuters poll.
Despite Bank Negara Malaysia (BNM) raising interest rates by a cumulative 125 basis points between May 2022 and May 2023, domestic consumption has stayed resilient and helped the economy grow at a sturdy pace.
The southeast Asian economy grew 3.4 per cent in the October-December period from a year earlier, the median forecast in a Feb 7 to Feb 13 Reuters poll of 23 economists showed. That was slightly better than the 3.3 per cent growth in the preceding quarter.
Forecasts ranged from 3.0 per cent to 5.8 per cent. Data will be released on Friday (Feb 16).
“The domestic economy has been doing pretty well, but exports have not and that is reflected in the manufacturing sector which is hardly growing at all,” said Alex Holmes, lead economist at Oxford Economics.
“I think domestic consumption has been strong over the course of 2023, but there are signs it’s starting to lose some of its shine now.”
BNM, at its Jan 23 to Jan 24 policy decision, highlighted the downside risks to the growth outlook “stemming from weaker-than-expected external demand and larger declines in commodity production”.
Weak demand from China, Malaysia’s biggest trading and investment partner, was one of the biggest hurdles to a recovery in the country’s exports, which fell 10 per cent on a year-on-year basis in December.
However, the economy still managed to grow 4.1 per cent in 2023, according to a separate Reuters poll, above the statistics department’s preliminary estimate of 3.8 per cent. It was expected to rise 4.5 per cent this year.
