M’sian economy grew to RM1.4t in 2018

4Q18 performance within DoSM’s expectation and the economy is likely to continue growing in 1Q19


Malaysia’s economic pie expanded to RM1.43 trillion based on current prices last year compared to RM1.35 trillion a year before and the momentum is expected to drive into 2019.

The economy expanded 4.7% for the whole of last year, rebounding in the final quarter (4Q18) after a sluggish April through September period, largely due to the country’s general election that slowed down the economic activities.

Key statistics of the 4Q18 would indicate a rising pace of the economic momentum, and growth of between 4.9% and 5% this year.

According to the Department of Statistics Malaysia (DoSM), Malaysia’s performance in the September to December period was within the department’s expectation and is expected to continue growing in the following quarter.

How did We Get to a RM1.4t?

Exports and imports rose by 8% and 5.7% respectively during the quarter, reflecting the robust production in the electrical and electronics (E&E) products and higher demand for intermediate and consumption goods.

“Exports of goods were valued at RM264.5 billion in 4Q18, while the main products that had contributed to the increase were the E&E pro-ducts, which had increased 11.8% to RM102.4 billion, followed by refined petroleum products, liquefied natural gas and crude petroleum.

“Conversely, the palm oil and palm oil-based products, which were valued at RM16.5 billion, declined 18% in this quarter,” the department said.

The intermediate goods, which contributed 51.8% to the total imports value of RM229.9 billion, increased by 1.2% to RM119.1 billion.

“The growth was mainly attributed by the industrial supplies, processed fuel and lubricants.

“The consumption goods had increased to RM19.6 billion, underpinned by the non-durable and durable processed food and beverages.

“The capital goods, which contributed 12.7% to the total imports, declined 9.4% to RM29.1 billion due to the decrease in both capital goods and industrial transport equipment,” it said.

Manufacturing and Services

The manufacturing sector had moderated 4.7% in 4Q18 against 5% in the previous quarter, while the E&E and optical products remained as the main contributor.

“The E&E and optical sector has expanded further by 6.9% backed by the printed circuit board, electronics and integrated circuit micro assemble, as well as communication equipment,” said the department.

The manufacturing performance during the quarter was further spurred by the transport equipment, other manufacturing and repair which augmented further to 8.7%.

Meanwhile, the services sector, which accounts for 56% of the national GDP, grew 6.9% against 7.2% in the previous quarter, contributed by the wholesale and retail trade, as well as the information and communication subsector.

“The wholesale and retail trade grew 8.6% backed by the retail segment which remained a double-digit growth of 12%.

“The information and communication sector remained strong by posting a growth of 8.1% ,” DoSM said.

For the annual performance of 2018, the manufacturing and services sector registered 5% and 6.8% respectively.

Labour Market

On the labour market condition, the statistic department said employment has registered a 2.4% increase during the last quarter of 2018 with 14.9 million of employed personnel registered.

It added that employment in the manufacturing sector increased by 2.7% while its wages rose by 9.8%, a marginal improvement from 9.6% in the previous quarter.

“Simultaneously, employment in the services sector remained flat while its salaries grew 4.1%,” it said.

Bank Negara Malaysia said the labour market condition has remained supportive of the economic activity as employment continues to expand amid the stable unemployment rate of 3.3% during the quarter.

Surplus of Payments

Malaysia’s balance of payments posted a surplus of RM10.8 billion in the September to December period, a surge from the RM3.8 billion in the 3Q, while for the full year, it registered RM33.5 billion.

“The favourable (quarterly) performance was spurred by the larger surplus in goods account at RM33 billion from RM26.6 billion in the previous quarter.

“For the year 2018, the current account surplus reached RM33.5 billion, which was contributed by the higher surplus in goods account at RM121.4 billion and a lower deficit in services account at RM19.7 billion,” DoSM said.


Meanwhile, the financial accounts recorded a net outflow of RM6.1 billion compared to the net inflow of RM2.3 billion in the previous quarter.

DoSM said the changes were attributed to the higher outflow in the portfolio investment and other investment accounts, which had offset the direct investment inflows of RM2.1 billion during the quarter.

Both portfolio investment and other investments have registered a net outflow of RM5.8 billion and RM1.8 billion respectively

The central bank said the outflow of the portfolio investments reflects the changes in the residents and non-residents’ asset transaction, which had been affected by the liquidation of equity securities amid financial market volatility.

“This has reflected a turnaround in residents’ portfolio asset transactions, following the higher purchases of equity securities abroad which registered a net outflow of RM3.3 billion in 4Q18.

“The non-residents recorded a smaller outflow of portfolio investments, amounting to RM2.5 billion in 4Q18, which was due to a net liquidation of equity securities, amid heightened global financial market volatility,” it said.


Meanwhile, the Consumer Price Index (CPI) for September to December period had eased to 0.2% against 0.5% in the previous quarter, while the headline inflation declined to 0.3% in 4Q18 from 0.5% in 3Q18, reflecting the negative transport inflation.

“The percentage of items in the CPI basket that had inflation of more than 2% remained low at around 9% in 4Q18,” the central bank said.

The Producer Price Index had decreased by 2% in 4Q18 compared to 0.1% in the previous quarter, contributed by the decline in agriculture, forestry and fishing, manufacturing and water supply.