Anwar, who is also finance minister, said to support the momentum of domestic growth, the government will maintain its responsive fiscal policy and continue to focus on expediting the realisation of approved investments and accelerate implementation of government projects.
“Despite the global economic challenges, Malaysia’s economy remains resilient and continues to improve,” he said in a statement issued by the ministry of finance (MoF) today.
He noted that inflation fell from 2.8% in May to 2.4% in June 2023, and unemployment achieved a new post-pandemic low of 3.4% in June, down from 3.5% in May.
According to MoF, Malaysia’s domestic inflation in June was tamer than advanced and regional countries such as the UK (7.9%), the Philippines (5.4%), Singapore (4.5%), Indonesia (3.5%) and the US (3%).
The ministry also said domestic demand bulwarked the Malaysian economy in the second quarter of 2023 (Q2 2023), against the backdrop of a cooling global trade.
The Q2 GDP growth moderated to 2.9% from 5.6% in Q1, bringing the first half (H1) growth to 4.2%, in line with the government’s growth forecast of 4% to 5% for 2023.
The slow down in economic growth was due to weaker external demand amid a global technology downcycle, lower commodity production and a high base effect from Q2 2022, Bank Negara Malaysia said when unveiling the economic performance for Q2 2023 today.
Nevertheless, domestic demand remained resilient in the second quarter, registering a 4.5% rise while Malaysia’s total trade contracted by 11.3% to RM643.4 billion in Q2.
“Public and private expenditures were also instrumental in anchoring the Malaysian economy in Q2, as they grew by 4.6% and 4.5% respectively.
“On the supply side, Malaysia’s economic expansion in Q2 was underpinned by growth in the construction, services and manufacturing sectors.
“The construction sector recorded the strongest performance, soaring 6.2% in the quarter, followed by services (4.7%) and manufacturing (0.1%),” it added.
In the meantime, MoF noted that external demand for the second half (H2) of 2023 will continue to be affected by global vulnerabilities.
This includes geopolitical tensions, the continuing supply chain disruption, tight monetary policy to address global inflation, and the growth prospects of major economies, many of which are Malaysia’s leading trading partners.