The Malaysian economy grew by 3% in the fourth quarter of 2023, driven by strong household spending and investment activity, despite subdued exports. Despite challenges from weak external demand and inflation moderation, the outlook for 2024 remains positive, with resilient domestic expenditure and an expected recovery in external demand supporting continued growth.
19 February 2024 – The Malaysian economy expanded by 3% in the fourth quarter of 2023, following growth rates of 3.3% and 2.9% in the third and second quarters, respectively. The growth was supported by robust household spending, buoyed by improved labor market conditions and easing cost pressures. Despite subdued exports due to weak external demand, investment activity saw growth, driven by ongoing projects and capacity expansion by firms.
The unemployment rate declined to pre-pandemic levels at 3.3%, while the labor force participation rate reached a historic high in 2023. However, the manufacturing sector remained soft, particularly in the electrical and electronics industry. Headline inflation decreased to 1.6%, driven by moderation in fresh food and core inflation.
Looking ahead, Malaysia’s growth outlook for 2024 remains positive, driven by resilient domestic expenditure and an expected recovery in external demand. However, risks persist, including weaker-than-expected external demand and declines in commodity production. Inflation is expected to remain modest in 2024, subject to changes in domestic policy and global commodity prices.
