Bank Negara Malaysia (BNM) and the statistics department reported that the gross domestic product (GDP) rose by 5.9% in the April-June period from a year earlier.
This compared with a preliminary reading of 5.8%. On a sequential basis, the economy expanded by 2.9% from the previous three months.
“The economy is set to expand at the higher end of the central bank’s forecast range of 4% to 5% this year,” said BNM governor Abdul Rasheed Ghaffour at a briefing in Kuala Lumpur today.
It’s the second time this year the final print exceeded the advanced estimates and points to a stronger-than-expected rebound for the Southeast Asian nation after growth faltered on tepid global demand last year.
He said foreign investments in the semiconductor industry and the AI-driven data centre boom are helping fuel the nation’s growth.
“Tourist spending in the first six months of the year exceeded the same period in 2019, before the pandemic outbreak, spurring private consumption.
“Growth will be sustained in the second half (H2) of the year on higher exports, household spending, and tourist arrivals,” said BNM.
In addition, it said further progress of multiyear projects will support investment growth, including data centres.
“Higher global demand for semiconductors is set to lift Malaysia’s electrical and electronics exports in 2024,” Rasheed said.
Rasheed added that price pressures are set to grow in the H2 of the year after the government allowed diesel prices to jump in June as it shifted toward targeted assistance.
“The impact will be manageable though.
“Malaysia’s headline inflation is unlikely to exceed 3%, barring further shocks,” Rasheed said, adding that officials are sticking with their projection for 2%-3.5% average price growth for the year.
He said BNM’s overnight policy rate of 3% remains supportive of the economy.
Consumer prices undershot estimates in June, even after the government removed blanket diesel subsidies that month.
Officials have indicated they’re in no hurry to do the same with the country’s highly subsidised and most popular petrol called RON95.
Risks still loomed over the economy. Sluggish growth in China, Malaysia’s biggest trading partner, could weigh on the Southeast Asian nation’s growth.
A fall in shipments to China contributed to Malaysia’s weaker-than-expected export growth in June.
For now, the optimism surrounding Malaysia’s economy has boosted the ringgit.
Citigroup Inc analysts have already raised their forecast for the nation’s growth to 5.2% in July.
Others may follow suit as economists’ median projection for the year is expected to stand at 4.5%.
“The ringgit is moving in the right direction,” Rasheed said, adding that BNM doesn’t target any particular levels.
Rasheed said BNM will continue to work with the government to support the local currency, as global geopolitical risks threaten to roil markets.
Malaysia’s policymakers have encouraged state-linked firms, funds, and companies in the private sector to repatriate their overseas income to help shore up the currency.
The local currency is the best performer in emerging markets this year after rebounding from a 26-year low reached in February.