Economic overview
In 2024, Malaysia’s GDP is expected to grow between 4.0 and 5.0 percent due to strong domestic demand driven by private sector expenditure - compared to average growth of 3.7 percent in 2023.
According to data from Department of Statistics Malaysia (DOSM), Malaysia’s GDP increased by 3.0 percent in the fourth quarter of 2023 compared to the third quarter, with the GDP value of the construction sector increasing by 6.0 percent compared to 2022. The average annual GDP growth, however, falls short of the targeted growth of above 4.0 percent for 2023.
This is mainly driven by the contraction in total exports, which saw a decline of 8.0 percent compared to the previous year. The manufacturing sector, which contributes 85.0 percent of the total export value, saw a decline of 26.0 percent and 23.0 percent from rubber and palm oil-based products due to weak global demand and reduced commodity prices.
Source: Department of Statistics Malaysia
The outlook for 2024 is anticipated to be more positive. According to data from the Malaysian Investment Development Authority (MIDA), the total approved private investments in 2023 increased by 25.0 percent compared to last year. Total foreign direct investments (FDI) have doubled compared to the COVID-19 value in 2019, which indicates growth and an increasing number of foreign companies making Malaysia the location for their investments.
The approved private domestic investment also saw an increase by 39.0 percent compared to last year, indicating increasing investor confidence in the government’s economic policies. The materialisation of these investments into projects are poised to boost private expenditure in 2024.
Source: Malaysian Investment Development Authority (MIDA)
In 2023, Malaysia recorded a total of 20.1 million tourist arrivals, double the numbers recorded in 2022. Visa exemptions for tourists from China and India, in place between December 2023-2024, are expected to further boost tourist numbers. This projected increase is poised to have a positive impact on the economy, bolstering spending, job creation and infrastructure development - generating a positive multiplier effect.
Malaysia’s Madani economy framework focuses on key strategies like building infrastructure, rallying investments, supporting local businesses and enhancing economic prosperity. This approach is consistent with the goals outlined in the Twelfth Malaysia Plan, National Energy Transition Roadmap (NETR) and New Industrial Masterplan (NIMP) 2030. The aim is to attract investors and establish Malaysia as a preferred destination for investment.
Source: Department of Statistics Malaysia
Over the past five years, the Ringgit has predominantly exhibited a weakening trend in relation to its major trading partners. Expectations of prolonged uncertainty from geopolitical tensions, volatile energy prices and a depreciating local currency mean that Malaysia will have to prop up domestic demand to maintain output stability.
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