KUALA LUMPUR (May 10): The country's unemployment rate is expected to come within the official forecast of 3.3% in 2024, thanks to a strong domestic economy and recovering external trade, according to economists.

The unemployment rate held steady at 3.3% in March, unchanged for the fourth consecutive month since November 2023, the Department of Statistics Malaysia said in a statement on Friday.

The number of unemployed individuals was marginally lower at 566,600, compared to February’s total of 567,000.

"The unemployment rate of 3.3% comes as no surprise, and this shows that the country's economy and labour market are more stable post-pandemic.

"We expect the unemployment rate for the full year of 2024 to meet Bank Negara's forecast of 3.3%," Socio-Economic Research Centre executive director Lee Heng Guie told The Edge.

Going forward, Lee expects exports to improve, with potential investments coming into the country, which will create more jobs and further strengthen the country's labour market.

"This is particularly true for the approved investments that the government announced previously, including the establishment of integrated circuit (IC) design parks in Selangor that Prime Minister Datuk Seri Anwar Ibrahim announced during the KL20 Summit 2024. If realised and implemented, this will further boost job creation," Lee added.

Similarly, MIDF Research anticipates that the country's labour market will continue to be robust, with the unemployment rate maintaining its post-pandemic low trend. This is expected to positively influence domestic consumption and GDP performance for the first quarter of 2024.

While noting that the return of non-citizen workers is expected to boost overall employment and reduce the jobless rate, MIDF also flagged downside risks to the country’s labour market, including lower-than-expected external trade recovery and a nosedive in global commodity prices.

UOB Global Economics & Markets Research, meanwhile, noted that the near-term outlook for the country's labour market remains positive, citing improvements in economic activities, increased investment flows and ongoing implementation of initiatives outlined in national master plans.

"Both the labour force and employment continued to expand to their largest-ever sizes of 17.1 million and 16.53 million, respectively, reaching an all-time high level," UOB said, adding that the employment-to-population ratio remained at a record high of 67.9% for the third month in a row, reflecting the Malaysian economy’s ability to create jobs.

With RM144.7 billion worth of digital investments approved between 2021 and 2023, creating over 39,000 job opportunities as announced by the Ministry of Investment, Trade and Industry (Miti), UOB believes Malaysia is well-positioned to attract further strategic investments in high-tech semiconductors.

"Thus, we continue to expect the labour market to remain in full employment (technically), with the jobless rate holding steady at 3.3% until the end of 2024," UOB added. 

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