Malaysia’s economic growth gained speed and exceeded expectations in the third quarter with strong upward contributions from domestic consumption and investment, while exports acted as a drag.
Gross domestic product expanded 3.3 percent after rising 2.9 percent in the second quarter, the Bank Negara Malaysia reported Friday. GDP was forecast to climb 3.0 percent.
On a quarter-on-quarter basis, economic growth strengthened to 2.6 percent from 1.5 percent in the preceding period.
Private consumption advanced 4.6 percent annually. Driven by increased supplies and services spending, public consumption rose 5.8 percent.
Private and public investment grew 4.5 percent and 7.5 percent, respectively.
Due to weaker external demand for goods and lower commodity prices, gross exports plunged 15.2 percent. Likewise, gross imports decreased 16.3 percent reflecting weaker intermediate imports.
In the first three quarters of 2023, the economy expanded 3.9 percent from a year ago.
BNM Governor Datuk Abdul Rasheed Ghaffour said the economy is set to grow around 4 percent in 2023 and 4-5 percent in 2024 despite the challenging global environment.
“Growth will continue to be driven by the expansion in domestic demand amid steady employment and income prospects, particularly in domestic-oriented sectors,” the governor said.
This growth performance along with other favorable economic developments would provide support to the ringgit, said Ghaffour.
Capital Economics economist Gareth Leather said the strength in economic growth is unlikely to last amid elevated interest rates and struggling exports.
The economist added that the economy will grow at a below-trend pace in the near term before picking up in the second half of the next year.
Regarding prices, the central bank said inflation is set to continue to ease over the remainder of 2023. Headline inflation is expected to average between 2.5 percent and 3 percent this year.
In the third quarter, headline inflation softened to 2 percent from 2.8 percent a quarter ago. At the same time, core inflation slowed to 2.5 percent from 3.4 percent.
The unemployment rate declined further in the third quarter to 3.4 percent from 3.5 percent a quarter ago.
The current account posted a surplus of 2.0 percent of GDP compared to 2.1 percent in the second quarter.
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