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Malaysia’s Economy Surpasses Expectations In Q1

Improvements in export performance and a revitalised domestic demand powered up Malaysia’s economy in the first quarter of 2024 (Q1 2024) by 4.2%, compared to 2.9% in Q4 2023.

With the Q1 2024 growth exceeding the Bloomberg forecast of 3.9%, the government is optimistic that Malaysia’s gross domestic product is well placed to expand within the official forecast range of 4% and 5%, according to the Ministry of Finance.

Prime Minister and Finance Minister YAB Dato’ Seri Anwar Ibrahim says, “In spite of the turbulent global economy, Malaysia’s economy has performed strongly. Within the first full year in office, the MADANI government initiated a full set of policy reforms, and remains committed to our reform agenda to transform the economy and public delivery.” The domestic economy’s encouraging performance in Q1 2024 indicates that the policies and economic management are effective in promoting growth, says the Prime Minister.

From the supply side, all sectors expanded and catalysed economic growth in Q1 2024:

  • The labour market continued its positive momentum, with total employment up by 2.1% to 16.4 million people. Over 50,000 new jobs were created, which contributed to the low unemployment rate of 3.3%. The growth of salaries and wages in the services and manufacturing sectors also remained encouraging at 3.3% and 1.2%, respectively.
  • Inflation remained benign at 1.7%, compared to 1.6% in Q4 2023.
  • The Industrial Production Index increased by 3.3% in Q1 2024 (Q4 2023: 0.8%), supported by positive momentum in all subsectors led by electricity (8.9%), mining (5.9%), and manufacturing (2.1%).
  • Construction’s value of work done recorded a growth of 14.2%, amounting to RM36.8 billion (US$7.83 billion) in Q1 2024 (Q4 2023: 6.8%; RM34.1 billion). This was attributed to the expansion in all subsectors, led by civil engineering (24.7%), specialised trade activities (11.8%), and residential buildings (11.5%).
  • On the external front, Malaysia’s total trade grew by 7.1% to reach RM690.6 billion, supported by an increase of 2.2% in gross exports to RM362.4 billion, and 13.1% in gross imports to RM328.2 billion. Malaysia continues to register a trade surplus, which amounts to RM34.2 billion in Q1 2024.
  • Current account of the Balance of Payments recorded a surplus of RM16.2 billion or 3.6% of GNI (Q4 2023: 0.2%; RM0.9 billion) supported by surplus in goods account as well as higher tourist arrivals. Net foreign direct investment stood at RM5.5 billion (Q4 2023: RM19.6 billion), particularly from Hong Kong, the US, Germany, Cayman Islands and Bermuda. This was channelled to the mining & quarrying sector, information and communication sector as well as financial and insurance/takaful activities.


The Ekonomi MADANI framework, which mapped out fresh strategies for Malaysia’s economic growth and identified new growth industries, has started to bear positive results, as evidenced by the expanding economy. This is further catalysed by economic measures outlined in Budget 2024, and the government’s commitment to introduce responsible fiscal management while ensuring the welfare of vulnerable communities are protected, says the Ministry of Finance.

Also, the implementation of strategies and measures under the National Energy Transition Roadmap, New Industrial Master Plan 2030, and the ongoing Twelfth Malaysia Plan initiatives, aimed at attracting quality investments in high value-added industries, will create high-income jobs and contribute towards lifting living standards.

However, like its neighbours that rely on trade with other countries, the Malaysian economy is affected by external factors such as global geopolitical risks; increased tension between the world’s two largest economies, US and China; and ongoing unrest in the Middle East, all of which negatively impact logistics and overall global trade activities.

Sounding a warning of Malaysia’s “softening labour market, weak currency and weak external demand” is Kar Yong Ang, Octa broker’s financial market analyst, who comments that these factors “are likely to weigh on economic activity in the coming quarters”. The prevailing tight monetary policy adopted by most advanced economies also poses downside risks for Malaysia, particularly the Malaysian ringgit, which has lost more than 2.4% against the US dollar since the beginning of 2024.

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