• Growth to be supported by a solid medium-term agenda

• Rebound in external trade performances

• Production to follow export recovery

• Inflation depended on fiscal outcomes

• Stable job market

• OPR to remain status quo

• Growth prospects remain intact

Malaysia's economy expanded 3.3% YoY in 3Q23 (2Q23: 2.9%), as resilient domestic demand offset continued export weakness. On a quarter-on-quarter basis, the economy rebounded to 5.2% QoQ growth from a decline of 0.8% QoQ in the previous quarter. On a seasonally adjusted basis, the economy grew 2.6% QoQ (2Q23: 1.5%), marking the third straight quarterly growth and the strongest in 5 quarters. Domestic demand remained the key driver of growth, with private expenditure rising to 4.6% in 3Q23 (2Q23: 4.3%), supported by continued growth in employment and wages whilst the tourism sector recovery, which saw increased tourist arrivals and spending, also contributed to the growth in domestic spending. Meanwhile, government expenditure surged to 5.8% in the quarter (2Q23: 3.8%). Growth in gross fixed capital formation (GFCF) or investment in fixed assets was sustained at 5.1% (2Q23: 5.5%) in this quarter, underpinned by the progress of multi-year projects and capacity expansion by firms. On the supply side, the services and construction sectors steered the overall performance, as well as the agriculture sector, which showed a slight recovery after a decline in the previous quarter. For the full year 2023, we expect Malaysia’s economy to grow at 3.7%.
 

Source: BIMB Securities Research - 12 Jan 2024