Malaysia’s economy grew at 3.0% y/y in 4Q2023 (3Q2023: 3.3% y/y) – supported by Services (4.2% y/y), Construction (3.6% y/y) and Agriculture (1.9% y/y) sectors. Mining and Quarrying sector rebounded to 3.8% y/y from a decline of 0.1% y/y in the 3Q2023. Meanwhile, the Manufacturing sector dropped slightly to 0.3% y/y.
Malaysia’s economy overall grew 3.7% (2022: 8.7%) in 2023 with a value of RM1.57 trillion at constant prices.
Demand Side
On the demand side, the performance was primarily driven by the year-onyear growth in the Private Final Consumption Expenditure (PFCE) that grew 4.2% (3Q2023: 4.6%), Gross Fixed Capital Formation (GFCF) rose 6.4% (3Q2023: 5.1%) while Government Final Consumption Expenditure strengthened to 7.3% (3Q2023: 5.8%).
Exports recorded a smaller contraction of 6.3% against a decline of 12.0% in the preceding quarter. Imports contracted to 2.9% y/y. (3Q2023: -11.1%). Contrarily, imports rebounded to 2.6% (3Q2023: -0.8%) in terms of seasonally adjusted, according to DOSM.
Consumer Price Index
Malaysia’s headline inflation edged up 1.8% in February 2024, following three consecutive months at a growth rate of 1.5%. The index point was recorded at 132.1. The increase in inflation was driven by Housing, Water, Electricity, Gas & Other Fuels (2.7%); Recreation, Sport & Culture (1.6%) and Transport (1.2%), while Restaurant & Accommodation Services (2.9%), Health (2.2%), Food & Beverages (1.9%) and Education (1.5%) recorded a slower increase in the same month.
On a month-on-month basis, CPI increased 0.5% vs 0.2% in January 2024.
Core Inflation
Core inflation in February 2024 remained at 1.8% y/y compared to the previous month. Monthly inflation in February 2024 registered 0.2% vs 0.3% in January 2024.
Inflation without fuel which covers all goods and services except Unleaded petrol RON95, RON97 and Diesel, increased to 1.7% y/y in February 2024 (January 2024: 1.5% y/y) to 122.5 vs. 120.4 in the same month of the preceding year.
Inflation by State
Five states recorded increases above the national inflation level; Pulau Pinang (2.7%), Pahang (2.4%), Selangor (2.1%), Perlis (2.0%) and Sarawak (1.9%), meanwhile Kedah recorded the lowest increase of 0.9% in February 2024.
The number of employed persons grew 0.2% m/m or +25.3 thousand persons in January 2024 to 16.48 million persons. Meanwhile, the number of unemployed persons decreased further with a marginal drop of 0.1% to 567.3 thousand persons in January 2024 from 567.8 thousand persons in the previous month. The labour force participation rate (LFPR) was unchanged at 70.2%, as in the preceding month.
The unemployment rate in January 2024 remained at 3.3%. Meanwhile, the employment-to-population ratio, which indicates the ability of an economy to create employment, rose by 0.1 percentage points to 67.9% (December 2023: 67.8%).
The number of persons outside the labour force decreased marginally to 0.01% to 7.234 million persons in January 2024 compared to 7.233 million persons in the previous month.
The Industrial Production Index rebounded 4.3% y/y in January 2024 (December: 0.03% y/y) to the highest growth recorded since May 2023. The year-on-year increase in January 2024 was supported by a surge of 3.7% in the Manufacturing sector compared to the negative 1.4% recorded in the previous month.
The Mining sector sustained its upward trend by registering 5.0% (December 2023: 4.1%) while the Electricity sector rose 8.3% compared to 4.1% y/y in the preceding month.
The sales value of the manufacturing sector rebounded to 3.2% y/y or RM152.7 billion in January 2024 (December 2023: -4.2%).
On a month-on-month basis, sales value grew by 1.9% as compared to -3.3% recorded in December 2023.
The domestic-oriented industries rose 8.0% against 4.2% in December 2023.
Meanwhile the export-oriented industries turned positive to 1.6% after seven consecutive months in negative territory (December 2023: -4.1%).
Sales value of wholesale & retail trade in January 2024 registered a growth of 5.4 % y/y to RM142.4 billion, contributed by the positive year-onyear growth in all sub-sectors namely Motor Vehicles (16.0%), Wholesale Trade (5.5%) and Retail trade (2.6%). For month-on-month comparison, sales value decreased -1.1%.
The Leading Index continues to grow 3.2% y/y to attain 112.0 points in January 2024: expecting a more encouraging economic performance in the coming months, according to DOSM. Month-onmonth, the index rose 1.6% vs. 0.3% in the preceding month.
The Coincident Index for the current economic position continued its growth since September 2021, rose 3.2% y/y to 124.1 points in January 2024, compared to 120.2 in the same month of the preceding year.
The Diffusion Index for Leading Index (LI) reached 57.1% compared to 42.9% registered in the previous month.
The Diffusion Index for Coincident Index (CI) however, registered a lower index of 50.0% compared to 66.7% previously.
According to the Malaysian Institute of Economic Research (MIER), Consumer Sentiment Index (CSI) has edged up to 89.40 points in 4Q2023 from 78.90 points in the third quarter; showing a positive trend as it has rebounded from the lowest recorded in recent years.
The Business Confidence (BCI) increased to 89.0 point, up by 9.3 points compared to the previous quarter. However, the index reading for 4Q2023 still falls below the 100-point threshold.
According to the Department of Statistics (DOSM), Business confidence has continued its increasing trend since Q323, growing 4.2% in Q124, indicating that businesses are confident about the future business environment.
All sectors expect stronger business conditions in 1Q24 with a confidence indicator of; Wholesale & Retail Trade sector (1Q24: +4.7%, 4Q23: -3.6%), Services sector (1Q24: +8.6%, 4Q23: +6.3%), Construction sector (1Q24: +10.3%, 4Q23:1.7%) & Industry sector (1Q24: +0.6%, 4Q23:4.0%).
Malaysia’s exports in February 2024, worth RM111.3 billion, fell by 0.8% y/y vs. 10.3% y/y in February 2023. However, imports increased 8.4% y/y to RM100.5 billion.
Trade balance recorded a surplus of RM10.9 billion vs. RM19.6 billion in the same month of the preceding year; marking the 46th consecutive month of surplus since May 2020.
Total trade continued its positive trend of 3.3% y/y to value RM211.8 billion in February 2024 compared to RM205.0 billion in the same month of the previous year.
Domestic exports increased 4.7% y/y from RM87.4 billion in the same month of the preceding year to RM91.5 billion in February 2024, while re-exports with a value of RM19.8 billion, decreased by 20.2% y/y from RM24.8 billion in the previous year
On a year-on-year year basis, Imports by End Use for Intermediate goods increased by 14.3% (RM55. 7b; 55.5% of total imports), Capital goods rose by 30.3% (RM10.2b; 10.2% of total imports) while consumption goods valued at RM8.4b grew by 19.7% or 8.4% of total imports.
The industry total loan growth accelerated to 5.7% y/y in January 2024 from 5.3% y/y in the previous month. The household loan growth rose to 6.1 y/y, while non-household increased to 5.1% y/y in the same month, compared to 4.5% y/y in December 2023.
Loan applications in January 2024 grew stronger to 39.8% compared to -8.8% y/y in the same month of the preceding year. In the household segment, both households and nonhouseholds also saw higher growth in loan applications in the same month.
The banking sector’s aggregate loan-to-fund ratio remained broadly stable at 81.6% in January 2024 vs. 81.8% in December 2023. The loan-to-deposit ratio (LD Ratio) for the sector picked up to 86.0%, while the aggregate Liquidity Coverage Ratio (LCR) continued to record a healthy liquidity buffer of 160.2% (December 2023: 160.9%).
Total deposit growth for the banking system moderated 5.2% y/y in January 2024 (December 2023: 5.6%). The demand deposits, fixed deposits and saving deposits register a growth of 7.4%, 4.3% and 0.3% respectively.
The banking system’s current account saving account (CASA) continued to grow for the fourth consecutive month to 5.1% y/y in January 2024, leading to a higher CASA ratio of 29.8% in January 2024 vs.29.5% in the previous month.
According to Bank Negara Malaysia (BNM), credit to the private non-financial sector grew by 5.0% y/y as at end January 2024 (December 2023: 4.7%), supported by higher growth in outstanding loans (December 2023: 5.4%).
Business loans outstanding increased to 4.2% (December 2023: 3.6%) supported by higher growth in investment-related loans. The outstanding loans to SMEs remained forthcoming with a marginal decline to 8.0% y/y from 8.2% in the previous month while the outstanding corporate bonds growth moderated slightly to 3.6% (December 2023: 4.2%).
In the household segment, outstanding household loan grew 6.0% in January 2024, supported by stable growth across most loan purposes especially for houses and cars purchases.
The aggregate Liquidity Coverage Ratio recorded 160.2% while the aggregate loan-to-fund ratio remained stable at 81.6% vs. 81.8% in December 2023.
The Total Industry Volume (TIV) for February 2024 registered a total of 62,833 vehicles, down by 4.1% m/m compared to 65,499 units delivered in the previous month. On a yearly basis, vehicle sales declined to 1.1% y/y vs. 30.6% y/y in January 2024, due to the shorter working month during the Chinese New Year holiday, according to the Malaysian Automotive Association (MAA).
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