Bank Negara Malaysia (BNM) said the slight increase in quarterly growth was supported by improvements in domestic demand, labour market conditions, tourism and construction activities.
“Household spending remained supported by continued growth in employment and wages. Meanwhile, investment activity was underpinned by the progress of multi-year projects and capacity expansion by firms,” said BNM in a press release today.
While BNM cautioned that exports are expected to remain soft amid prolonged weakness in external demand, it will be partially offset by the recovery in inbound tourism.
On the supply side, BNM said that the services, construction and agriculture sectors remained supportive of growth.
However, the economic expansion was partly offset by the decline in production in the manufacturing sector given the weakness in demand for electrical and electronic (E&E) products and lower production of refined petroleum products.
“On a quarter-on-quarter seasonally adjusted basis, the economy grew by 2.6% (Q2 2023: 1.5%). Overall, the Malaysian economy expanded by 3.9% in the first three quarters of 2023,” said BNM.
Headline inflation continued to moderate to 2% this quarter compared to the preceding quarter of 2.8%.
“For non-core inflation, fresh food and fuel contributed to the decline, whilst core inflation declined further to 2.5% from 3.4% in the previous quarter but remained above its long-term average (2011-2019 average: 2%).
“The moderation in core inflation was largely contributed by selected services, including food away from home, expenditure in restaurants and cafés, and personal transport repair and maintenance,” said BNM.
Moving forward, BNM governor Abdul Rasheed Ghaffour said despite the challenging global environment, the Malaysian economy is projected to expand by around 4% in 2023 and 4%–5% in 2024.
“Growth will continue to be driven by the expansion in domestic demand amid steady employment and income prospects, particularly in domestic-oriented sectors.
“This growth performance along with other favourable economic developments would provide support to the ringgit,” he concluded.
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