Malaysia’s Economy to Grow by 5.0% in 2024

Malaysia’s economy is expected to grow by 5.0% in 2024, with key contributions from strong domestic demand and a recovering export sector.

Domestic Demand as the Key Growth Driver

The GDP data for the second quarter of 2024 (2QCY24) reveals that domestic demand has been the main driver of economic growth. Stronger consumer expenditures, which rose by 6.0% year-on-year (yoy) compared to 4.7% yoy in the first quarter, underline this trend. The robust labor market and positive income growth are anticipated to continue supporting consumer spending throughout the year.

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Export Recovery to Further Boost Growth

Malaysia’s export sector showed a notable recovery in 2QCY24, with real exports growing by 8.4% yoy, an improvement from the 5.2% yoy growth in 1QCY24. This recovery is expected to persist in the second half of 2024, driven by a stronger performance in electrical and electronics (E&E) exports and continued demand for commodities like palm oil, liquefied natural gas (LNG), petroleum products, and other manufactured goods.

Export Recovery to Further Boost Growth

The Malaysian ringgit is projected to appreciate significantly by year-end, reaching RM4.23, representing an 8.6% increase from RM4.594 at the end of 2023. This is due to the market anticipating a rate cut by the U.S. Federal Reserve at the upcoming FOMC meeting in September 2024 and the expected maintenance of the Overnight Policy Rate (OPR) at 3.00% by Bank Negara Malaysia (BNM).

Upward Revision of 2024 GDP Growth Forecast

Given the positive indicators from the first half of 2024, the GDP growth forecast for Malaysia in 2024 has been revised upward from 4.7% to 5.0%. The outlook remains positive for continued domestic spending and export recovery in the second half of the year.