Malaysia’s economy expanded by 3.8% in 2023, according to the official figures released by Bank Negara Malaysia (BNM) today. This growth, while positive, falls short of the initial estimates of 4.0% and marks a significant moderation from the robust 8.7% growth recorded in 2022.
The report attributes the slowdown to several factors, including:
- Weakening external demand: Prolonged global economic uncertainties and a decline in global trade dampened Malaysia’s export performance.
- Manufacturing sector softness: The electrical and electronics industry, a key contributor to Malaysia’s manufacturing sector, experienced continued weakness.
- Moderating domestic consumption: While household spending remained positive, the growth rate has slowed compared to the previous year.
However, there were also positive aspects to the report:
- Resilient domestic demand: Despite the slowdown, household spending and investment activity continued to provide some support to the economy.
- Rebounding mining and agriculture: These sectors showed signs of recovery, contributing to the overall GDP growth.
- Strong labor market: The unemployment rate remained low, indicating continued improvement in the labor market conditions.
BNM Governor, Tan Sri Nor Shamsiah Mohd Yunus, stated, “The Malaysian economy navigated a challenging external environment in 2023. While growth moderated, the performance reflects the underlying resilience of the domestic economy.”
Looking ahead, BNM forecasts a slightly higher growth of 4.0% to 4.5% for 2024, supported by a potential recovery in global trade and continued efforts to strengthen domestic demand. However, global uncertainties, geopolitical tensions, and inflationary pressures remain key risks to the outlook.
Economists generally viewed the 2023 GDP growth as disappointing but within expectations. They emphasised the need for continued policy support to address external headwinds and promote sustainable growth in the future.
