Malaysia’s growth in 2023 slower than forecast as exports weaken

Bank Negara Malaysia (BNM) has said that the country’s economic growth in 2023 normalised to 3.7%, below the 4-5% target due to “prolonged weakness” in external demand.

An aerial view of Kuala Lumpur (Photo: thestar.com.my)

According to the central bank, in the third quarter of 2023, gross domestic product (GDP) expanded 3.3% as buoyant domestic spending offset weak external demand. Malaysia's exports, which have been in decline since March, contracted 8% in 2023.

Malaysia's full-year economic growth was expected to come in at 3.8% in 2023, below the government's projection of a 4% expansion and a sharp drop from a 22-year high of 8.7% in 2022.

Analysts said Malaysia's growth outlook was anticipated to remain cloudy in coming months, flagging risks including a possible spike in inflation following planned subsidy cuts this year.

The Southeast Asian economy’s growth moderated due to a challenging external environment of slower global trade, geopolitical tensions, and tighter monetary policies, the bank note.

Moving forward, the BNM said growth in 2024 will be driven by resilient domestic expenditure and improvement in external demand.

It said the tech upcycle combined with stronger external demand and continued improvement in the tourism sector will provide support to Malaysia's exports.

On the domestic front, the bank said household spending will be supported by continued employment and wage growth.

Investment activity, meanwhile, will be underpinned by further progress of multi-year projects, by both the private and public sectors, as well as the implementation of catalytic initiatives under the various national master plans./.

VNA