MALAYSIA’S real GDP growth expanded by 3.4% in 4Q23, only slightly higher than 3.3% in 3Q23, falling below market expectations of 4.1%, with the services sector remaining as the main economic growth driver.

As this was an advance estimate, therefore it is subject to revision when BNM releases the actual GDP figure on Feb 6, 2024, according to a local research house.

“We expect Malaysia’s real GDP growth to accelerate to 4.5% in 2024 (3.8% in 2023E), underpinned by recovery in global trade activities and resilient domestic demand,” said Affin Hwang Investment Bank Bhd in a note released today.

It noted that the services sector remained as the main economic growth driver, contributing 2.8 percentage points to the overall GDP growth, reflecting the country’s resilient domestic demand.

Despite declining manufacturing sales, the report noted that growth in the manufacturing sector rebounded to a marginal positive territory, expanding by 0.1% yoy in 4Q23 after experiencing a contraction of 0.1% in the previous quarter.

It said the sector’s growth was underpinned by output of food and metal-related sub-sectors but dragged down by export-oriented sub-sectors, such as E&E and petroleum, chemical, rubber & plastics sub-sectors.

“In the months ahead, we anticipate the global economic outlook to remain weak in 1H24, due to subdued global manufacturing and trade activities as well as rising geopolitical tension (relating to possible disruption to global supply chains from shipping and rising costs).

“Nevertheless, we expect the global growth momentum to pick up in 2H24 as the anticipated easing of global monetary policy may boost business confidence, encouraging investment and production expansion,” the report added.

As one of the most critical trade partners, it said the stable recovery of China’s economy is poised to provide additional support for the recovery of Malaysia’s external demand. – TMR / pic TMR FILE