Malaysia's Economy Grows 5.3% in the Third Quarter of 2024, Keeping the Full Year on Course for 4.8%–5.3%
Malaysia's economy expanded by 5.3% year-on-year in the third quarter of 2024, a moderation from the 5.9% recorded in the second quarter, as strong investment activity and a continued improvement in exports kept growth firmly inside the government's official forecast range for the year.
5.3% in the third quarter, 5.2% for the first three quarters
KUALA LUMPUR, November 15, 2024 — The Malaysian economy expanded by 5.3% in the third quarter of 2024, against 5.9% in the second quarter, Bank Negara Malaysia said in its quarterly release "Economic and Financial Developments in Malaysia in the Third Quarter of 2024", published by Bank Negara Malaysia on Nov 15, 2024. On a quarter-on-quarter, seasonally adjusted basis, growth momentum moderated to 1.8% from 2.9% in the preceding quarter. For the first three quarters of 2024 as a whole, the economy expanded by 5.2%.
The central bank's key reported figures for the quarter are as follows:
- GDP growth, year-on-year: 5.3% in the third quarter of 2024, against 5.9% in the second quarter;
- GDP growth, quarter-on-quarter and seasonally adjusted: 1.8%, against 2.9% in the second quarter;
- growth for the first three quarters of 2024: 5.2%;
- headline and core inflation: both stable at 1.9%, the same rates as in the second quarter.
Investment and exports led the quarter
Bank Negara Malaysia attributes the third-quarter expansion to strong investment activity and a continued improvement in exports. Investment activity was underpinned by strong spending on structures and on machinery and equipment, while exports continued to strengthen on the back of recovering external demand and positive spillovers from the global technology upcycle. Household spending sustained its expansion amid positive labour market conditions and policy support.
Household spending and the labour market
The central bank expects household spending to remain underpinned by continued employment and wage growth as well as policy measures, while the growth path going forward will be driven by a robust expansion in investment activity, a continued improvement in exports and resilient household spending. In the central bank's assessment, the combination of these engines kept the quarter's expansion broad-based across the demand side of the economy rather than dependent on a single component.
- investment activity, supported by strong spending on structures and on machinery and equipment;
- exports, strengthened by recovering external demand and positive spillovers from the global technology upcycle;
- household spending, sustained by positive labour market conditions and policy support.
Supply side: manufacturing up, mining a drag
On the supply side, most sectors remained supportive of growth in the third quarter of 2024. The improvement in the manufacturing sector was driven by export-oriented clusters, consistent with the recovery in external demand and with the technology cycle. Growth was partly offset by maintenance activities in the mining sector, which trimmed the contribution of the extractive industries to the quarter's result.
Inflation stable at 1.9%
Price pressures remained contained during the quarter. Both headline and core inflation were stable at 1.9%, the same rates as in the second quarter of 2024, and for the year to date both measures averaged 1.8%. Higher inflation was observed for diesel, at 20.1% against 5.3% in the second quarter, and for vehicle insurance, at 0.8% against minus 0.1%, while food and beverages inflation eased to 1.6% from 1.9%. The share of Consumer Price Index items recording monthly price increases was lower, at 38.9% during the quarter against 49.4% in the second quarter.
Full-year outlook: on course for 4.8%–5.3%
The third-quarter result keeps the full year inside the government's official forecast. In a same-day release, the Ministry of Finance of Malaysia stated that the strong third quarter puts the country on course to achieve full-year growth of 4.8%–5.3%, the range to which the official 2024 forecast was revised upward from the initial 4%–5% estimate; the ministry's release is published at mof.gov.my. The first-three-quarters growth of 5.2% reported by the central bank compares with 3.8% in the same period a year earlier.
Risks and upside to the outlook
Bank Negara Malaysia notes that the growth outlook remains subject to downside risks stemming from slower external demand, further escalation of geopolitical tensions and protectionist measures, as well as weaker-than-expected commodity production. Upside risks to the outlook include greater spillovers from the technology upcycle, faster implementation of investment projects and more robust tourism activity.
The quarter in figures
- third-quarter 2024 GDP growth: 5.3% year-on-year (second quarter of 2024: 5.9%);
- quarter-on-quarter, seasonally adjusted: 1.8% (second quarter of 2024: 2.9%);
- first three quarters of 2024: 5.2%;
- headline and core inflation: 1.9% each, unchanged from the second quarter; year-to-date average 1.8%;
- full-year 2024: on course for the official 4.8%–5.3% growth range.
The figures above are drawn from the Bank Negara Malaysia quarterly release of Nov 15, 2024, available at bnm.gov.my, and from the Ministry of Finance release of the same date.
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