Malaysia economic growth Q4 resilient consumption poll

Malaysia's economy grows despite falling exports, with domestic consumption offsetting. Bank Negara Malaysia raised interest rates, but growth remains steady.

Malaysia's economy has shown steady growth in the fourth quarter despite a decline in exports, with private consumption playing a key role in offsetting this trend. According to a Reuters poll of 23 economists, the economy grew by 3.4% in the October-December period, slightly better than the previous quarter.

The increase in private consumption has helped the economy maintain a sturdy pace, even in the face of a cumulative 125 basis point interest rate hike by Bank Negara Malaysia (BNM) between May 2022 and May 2023. However, there are concerns about the sustainability of this growth, as reflected in the manufacturing sector's stagnant performance.

Alex Holmes, lead economist at Oxford Economics, noted that while domestic consumption has been strong, there are signs that it may be losing momentum. BNM also highlighted downside risks to the growth outlook, particularly stemming from weaker external demand and declines in commodity production.

One of the major hurdles to a recovery in exports has been weak demand from China, Malaysia's largest trading partner. Despite this, the economy still managed to grow by 4.1% in 2023, surpassing the statistics department's preliminary estimate of 3.8%. The forecast for 2024 is a further increase to 4.5%.

In conclusion, Malaysia's economy has shown resilience in the face of challenges, with private consumption playing a crucial role in driving growth. However, concerns remain about the sustainability of this growth, particularly in the context of weak external demand and declining exports.