Malaysia’s economy expands 3.3% YoY in 3Q23


MALAYSIA’S economy has expanded by 3.3% year-on-year (YoY) in the third quarter of 2023 (3Q23), compared to 2.9% in 3Q22. 

According to the Department of Statistics Malaysia (DoSM), the economies of Asian countries are also expected to grow by 4.6% in 2023, with a potential moderating rate of 4.2% in 2024. 

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the expansion was supported by the domestic demand in the services and construction sectors. 

“In terms of quarter-on-quarter seasonally adjusted GDP, it increased by 2.6% (2Q23: 1.5%) in this quarter,” he said in a statement. 

Meanwhile, Malaysia’s current account balance continued to maintain a surplus in 3Q23, recording RM9.14 billion compared to RM19 billion in 3Q22, supported by net exports of goods. 

“Foreign direct investment (FDI) also recorded a lower net inflow of RM7.2 billion against RM9.6 billion for the same quarter last year. “Adding to this, direct investment abroad (DIA) recorded a net outflow of RM13.4 billion in 3Q23 (2Q23: RM8 billion),” Mohd Uzir added. On the other hand, Malaysia’s total trade decreased 15.7% in 3Q23, with exports falling 15.2% and imports falling 16.3%, respectively, resulting in a 9.1% decrease in the trade surplus.

In September 2023, merchandise trade experienced a 12.6% YoY decrease in exports and imports, while trade surplus decreased by 23%. 

Malaysia’s trade performance in October showed a slight decrease, with total trade (2.4%), exports (4.4%) and imports (0.2%) experiencing the first single-digit decline since May 2023, and a 30.3% decline in trade surplus. 

The manufacturing sector experienced a 2.7% YoY decrease in 3Q23, primarily due to the decline in sub-sectors of petroleum, chemical, rubber and plastic (-13.3%); food, beverage and tobacco (-5.3%); and wood, furniture, paper products and printing (-0.5%) whereas the annual performance also saw a slower decrease of 1.9%. 

Malaysia’s Industrial Production Index (IPI) saw a slight decline of 0.04% in 3Q23, while the Services Volume Index rose 4.4% to 146.7 points. 

In the same quarter, the services sector’s revenue grew 7.6% YoY to RM584 billion, while the number of employed persons increased by 0.6% to 16.25 million. 

The employment-to-population ratio increased to 67.7% in 2Q23, while the unemployment rate improved to 3.4%, with 38,800 unemployed persons compared to 611,800 in 3Q22. 

Inflation in Malaysia decreased to 2% in 3Q23, reaching 130.7 compared to 128.1 in the previous year while in September, it fell to 1% due to lower prices in restaurants and hotels, food and non-alcoholic beverage, and furnishings and in October, it reached 1.8%, the lowest since April 2021. 

In September 2023, Malaysia’s Producer Price Index (PPI) saw a 0.2% increase, but a marginal 0.3% decline in October 2023. 

“Based on these economic indicators developments, Malaysia’s economy is expected to expand at a slower pace in the near future, as indicated by the Leading Index (LI), which showed better movement for three consecutive months to negative 0.3% by recording 109.3 points in September 2023 compared to negative 0.5% in the previous month. 

“Despite remaining below the 100 points trends in the smoothed long-term analysis for September 2023, LI suggests that Malaysia’s economy is poised for moderate growth in the near future, supported by an increase in investment spending, favourable labour market conditions and encouraging local demand,” Mohd Uzir said. 

  • This article first appeared in The Malaysian Reserve weekly print edition