• GDP growth accelerated in 2Q24 to 5.9% YoY (1Q24: 4.2%), surpassing house forecasts and market expectations (KIBB: 5.1%; Bloomberg consensus: 5.8%) and slightly exceeding DOSM’s advance GDP estimates of 5.8%
  
  − Growth was driven by strong household spending, a rebound in exports, and rising tourist arrivals. These factors also boosted the services and manufacturing sectors. Additionally, significant expansions in the construction and agriculture sectors supported the overall momentum.
  
  − Meanwhile, seasonally adjusted QoQ growth expanded (2.9%; 1Q24: 1.5%) for the second straight quarter, mainly due to strong expansion in private final consumption expenditure (4.5%; 1Q24: 1.8%) and gross fixed capital formation (5.1%; 1Q24: 2.8%). This was also attributable to a broad-based expansion, led by the construction (8.7%; 1Q24: 7.9%), services (3.3%; 1Q24: 1.3%), manufacturing (3.1%; 1Q24: 2.4%) and agriculture (1.6%; 1Q24: - 0.7%) sectors. Bucking the trend, the mining sector contracted (-4.0%; 1Q24: -1.4%) for the second straight quarter.
  
  − Comparatively, Malaysia is currently ranked third in the ASEAN-5 (excluding TH, but +VN) group for 2Q24 GDP performance, behind Vietnam (6.9) and the Philippines (6.3%) but ahead of Indonesia (5.0%), and Singapore (2.9%).

• Resilient domestic demand fuelled by sustained private spending during the festive season and sustained large public spending, was further boosted by a rebound in net exports
  
  − Domestic demand (6.9%; 1Q24: 6.1%): increased to a six-quarter high, driven by strong private sector growth which outpaced expansion in public sector spending. Overall, domestic demand contributed 6.5 percentage points (ppts) to the overall 2Q24 GDP (1Q24: 5.7 ppts).

• Public spending (4.9%; 1Q24: 8.4%): slowed, adding just 0.8 ppts (1Q24: 1.3 ppts) to the overall 2Q24 GDP growth. The slower expansion was largely due to lower public consumption (3.6%; 1Q24: 7.3%) and public investment (9.1%; 1Q24: 11.5%).

• Private spending (7.3%; 1Q24: 5.7%): expanded strongly, driven by solid private consumption (6.0%; 1Q24: 4.7%) and private investment (12.0%; 1Q24: 9.2%). Its contribution to overall 2Q24 GDP growth surged to 5.7 ppts (1Q24: 4.4 ppts), the highest since 3Q22 (11.2 ppts).
  
  − Net exports (3.4%; 1Q24: -24.5%): rebounded following four straight quarters of contraction, aided by positive expansion in value-added exports, although still outstripped by imports, contributing 0.1 ppts to overall 2Q24 GDP growth (1Q24: -1.4 ppts).

• Exports (8.4%; 1Q24: 5.2%): expanded due to higher value-added exports of goods (5.5%; 1Q24: 1.0%), which represent 82.6% of total exports. Growth was also supported by value-added services exports (24.6%; 1Q24: 33.8%) which maintained double digits expansion.

• Imports (8.7%; 1Q24: 8.0%): increased due to higher value-added imports of goods (9.0%; 1Q24: 7.1%), and further expansion in imports of services (7.2%; 1Q24: 12.0%) albeit at a slower pace.

• Solid expansion in the services and agriculture sectors, manufacturing growth recovery, and a surge in the construction sector boosted 2Q24 GDP growth
  
  − Services (5.9%; 1Q24: 4.8%): expanded to a five-quarter high, surpassing our projection of 5.7% and DOSM's advance estimate of 5.6%. The sector’s growth was led by retail trade (5.6%; 1Q24: 3.6%) and wholesale trade (3.0%; 1Q24: 3.8%), which together accounted for 26.4% (1Q24: 26.0%) of the overall services sector. Notably, the finance sector also expanded strongly (6.2%; 1Q24: 3.0%). Overall, the services sector continued to be a major contributor, adding 3.5 ppts to overall GDP growth (1Q24: 2.8 ppts).

Source: Kenanga Research - 19 Aug 2024