KUALA LUMPUR: Malaysia's economy grew 5% in the fourth quarter of 2024 (4Q24), slightly above market expectations and the official advance estimate of 4.8%.
The economic report released by Bank Negara said growth in 4Q, which moderated from 5.3% in the preceding quarter, was supported by continued expansion in the services, manufacturing and construction sectors.
Meanwhile, the export of goods and services also expanded while capital and intermediate imports growth moderated.
On the flip side, there was a construction in the commodities sector due to lower oil palm output as well as the continued decline in oil production.
On a quarter-on-quarter, seasonally-adjusted basis, growth declined by 1.1%.
Over the entire year, Malaysia's economy grew 5.1%
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"On the domestic front, growth was mainly driven by stronger household spending reflecting favourable labour market conditions, policy measures to support households and healthy household balance sheets," said Bank Negara.
It added that there was a boost to investment growth due to strong investment approvals and further progress of multi-year projects by the private and public sectors.
These included includes catalytic initiatives under national master plans (ie New Industrial Master Plan, National Energy Transition Roadmap, and National Semiconductor Strategy).
External factors that contributed to the economic growth included recovering exports amid steady global growth, the continued tech upcycle as well as higher tourist arrivals and spending.
The central bank said this provided support to the current account, leading to a continued surplus of 1.7% of gross domestic product (GDP) in 2024 as compared to 1.5% in 2023.
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"Going forward, while the global environment could be challenging, growth of the Malaysian economy will be driven by robust expansion in investment activity, resilient household spending and expansion in exports supported by Malaysia’s strong economic fundamentals," said Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour.
He added that investment activities on the domestic front will be driven by the favourable progress of multi-year projects in both the private and public sectors and further lifted by the realisation of approved investments.
Household spending will benefit from the continued support from employment and wage growth as well as government policy measures.
"This includes the upward revision of the minimum wage and civil servant salaries."
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On the external front, the ongoing global tech upcycle, continued growth in non-electrical and electronic goods and higher tourist spending are expected to lift exports.
The growth outlook remains subject to downside risks. Such risks include an economic slowdown in major trading partners amid the heightening risk of trade and investment restrictions and lower-than-expected commodity production.
Nevertheless, potential upside to growth includes greater spillovers from the tech upcycle, more robust tourism activities and faster implementation of investment projects.
On inflation, Bank Negara said cost increases are expected to remain manageable in 2025 amid easing global cost conditions and the absence of excessive domestic demand pressures.
"While the recently-announced domestic policy reforms would contribute to some upward pressure on prices, the overall impact on inflation is expected to be contained.
"Nevertheless, upside risks could arise from larger cascading effects from policies to broader CPI prices," said the central bank.
