Malaysia’s Economy to Grow 4.8% Amid Strong Investment

Malaysia is projected to sustain its 4.8% economic growth forecast for 2024, primarily driven by consumer spending, according to Standard Chartered Bank Malaysia (StanChart). The bank’s report highlights that while consumer spending may moderate due to softening labor-market conditions, it will remain a key growth driver. Investments are expected to benefit from ongoing infrastructure projects, strong foreign direct investment (FDI) interest, and favorable global interest rates.

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The external sector should gain from an improved global electronics cycle and easing global monetary policies. Tourism recovery is anticipated to continue, though its contribution to growth may diminish as it nears pre-COVID levels.

Strong Investment

StanChart predicts that Bank Negara Malaysia will maintain the overnight policy rate at 3% throughout 2024, given that inflation rates are in line with forecasts. Private consumption grew by 6% in Q2, up from 4.7% in Q1, supported by resilient labor conditions and Employee Provident Fund withdrawals. Investments contributed significantly to GDP growth, reaching 2.1% in Q2, the highest in three years, driven by both domestic and foreign investments.

FDI inflows increased nearly 90% year-on-year in the first half of the year, with expectations of continued strong inflows as global interest rates decline. Exports of goods and services rose notably, with goods exports up 5.8% year-on-year, supported by commodities and electronic products. Meanwhile, the services deficit improved due to a strong travel services surplus, with tourist arrivals recovering to 87% of 2019 levels as of May 2024.