Data Highlights

• The Department of Statistics Malaysia (DOSM) has introduced an initiative, known as the Advanced Quarterly Estimates of Value Added, which is published exclusively in constant prices and encompasses the five primary economic sectors. Multiple methodologies are employed to estimate the value added on a quarterly basis. These advance estimates of the quarterly Gross Domestic Product (GDP) represent an effort by DOSM to offer early insights into economic performance, ensuring the timely availability of macroeconomic statistics. These preliminary estimates are generated using a partial dataset and rely heavily on data derived from DOSM's surveys and administrative records from the relevant government agencies. 

• In the third quarter of 2023, Malaysia's GDP saw a YoY increase of 3.3% to RM397.53bn. This growth was slightly faster than the 2.9% YoY growth observed in the preceding quarter of 2023. The services sector (59.2% of GDP in 3Q23E) continued to be the driving force behind this quarter's overall economic performance, whereas the construction sector (3.6% of GDP) remained relatively subdued. Additionally, the agriculture sector (7.0% of GDP) exhibited a mild recovery after experiencing a decline in the previous quarter. However, the mining & quarrying (5.8% of GDP) and manufacturing (23.2% of GDP) sectors experienced contractions during this period. 

• Particularly, the growth of 3Q23 GDP was mainly due to the resilience performance of:
  
  o Services sector rose by 5.1% YoY to RM235.18bn (2Q23: 4.7% YoY). This was supported by wholesale & retail trade, transportation & storage and business services sub-sectors. Furthermore, Food & beverages and Accommodation sub-sectors, which are related to tourism activities, also expanded. Meanwhile, the Finance and insurance sub-sectors declined in this quarter.
  
  o The construction sector recorded a growth of 5.8% YoY, amounting to RM14.45bn, down slightly from the 6.2% YoY growth observed in the second quarter of 2023. This growth was driven by civil engineering and specialized construction activities.
  
  o The agriculture sector grew marginally by 0.8% to RM27.91bn (2Q23: -1.1% YoY), attributed to better production in the oil palm sub-sectors. Data from the Malaysian Palm Oil Board (MPOB) indicated a 2.4% YoY (24.8% QoQ) surge in crude palm oil (CPO) production to 5.19mn tonnes in the third quarter of 2023, aligning with the seasonal trend.

• On the other hand, certain sectors experienced contractions:
  
  o The mining & quarrying sector saw a marginal YoY decrease of 0.1% to RM23.12bn, following a 2.3% YoY decline in the second quarter of 2023. The decline was attributed to reduced production in the natural gas sub-sector. However, other sub-sectors within mining & quarrying, such as supporting services and crude & condensate, continued to grow in this quarter.
  
  o The manufacturing sector also declined marginally by 0.1% to RM92.27bn (2Q23: 0.1% YoY) in this quarter, underpinned by electrical, electronic & optical products and petroleum, chemical, rubber & plastic products following weaker external demand. 

• The advance GDP estimate provided by DOSM is only 0.2 percentage points lower than our own estimate of 3.5% YoY growth. Consequently, we are maintaining our forecast, projecting that the full-year GDP growth for this year will be approximately 4.2%, which slightly exceeds the Ministry of Finance's projection of 4.0%. The DOSM is dedicated to compiling and disseminating statistics that cater to the requirements of statistical users. The GDP figure for the third quarter of 2023 is scheduled to be released by DOSM in November 2023.

Source: TA Research - 23 Oct 2023