KUALA LUMPUR: Malaysia’s economy, as measured by Gross Domestic Product (GDP), registered a growth of 4.2% in the first quarter of 2024 (Q4’23: 2.9%), driven by private expenditure and a turnaround in exports, according to Bank Negara Malaysia (BNM).
Household spending was higher amid growth in employment and wages.
Investment activities were supported by capital spending by both the private and public sectors.
Exports rebounded amid higher external demand.
On the supply side, most sectors registered growth.
The manufacturing sector was lifted by a rebound across both the electrical and electronic (E&E) and non-E&E industries.
The growth in the services sector was driven by retail trade activities and support from the transport and storage subsector.
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 1.4% (Q4’23: -1%).
Headline inflation remained at 1.7% during the quarter (Q4’23: 1.6%).
The increase in headline inflation reflects the policy adjustments to water tariffs in February and services tax for high-usage electricity in March, which increased by 20.8% (Q4’23: 2.1%) and 0.7% (Q4’23: 0%) respectively.
Core inflation moderated to 1.8% (Q4’23: 2%), driven by easing in the food and beverages segment.
Inflation pervasiveness edged higher, as the share of Consumer Price Index (CPI) items recording monthly price increases rose to 44.2% during the quarter (Q4’23: 36.3%).
Nonetheless, this remains well below the first quarter long-term average (corresponding first quarter periods during 2011-2019) of 52.2%.
Domestic financial markets continued to be driven mainly by shifting financial market expectations over the monetary policy path of major central banks.
“In particular, global financial markets reacted to expectations that the US Federal Reserve would maintain its current policy interest rate for a longer period and make fewer policy rate cuts in light of continued strong US economic data.
“The current pressure reflects broader currency market dynamics and is not specific to Malaysia,” it said.
From the beginning of the year until May 15, 2024, the ringgit has depreciated by 2.4% against the US dollar, in line with the movements of other regional currencies.
The ringgit also appreciated on a nominal effective exchange rate (NEER) basis, by 0.5%.
BNM said it is deploying the tools at its disposal to ensure that domestic financial markets remain orderly and continue to function efficiently.
In addition, it said the initiatives by the government and BNM with the Government-Linked Companies (GLCs) and Government-Linked Investment Companies (GLICs), as well as engagements with corporates and exporters have gained traction, resulting in greater and more consistent flows into the foreign exchange market.
“These have helped cushion the pressure on the ringgit,” it said.
The daily average foreign exchange (FX) trading volume has also increased to US$17.6 billion during the period of Feb 26 – May 15, 2024 (Jan 2 – Feb 23, 2024: USD15 billion) alongside a narrower bid-ask spread, indicating improved liquidity in the domestic FX market.
Credit growth to the private non-financial sector increased to 5.2% (Q4’23: 4.8%).
This was supported by growth in outstanding loans to both businesses (4.9%; Q4’23: 3.7%) and households (6.2%; Q4’23: 5.7%) while outstanding corporate bonds growth grew at a more moderate pace (3.2%; Q4’23: 4.2%).
The business loan growth was driven mainly by growth in investment-related loans.
By sector, the growth was supported by the construction and services sectors.
For households, outstanding loan growth was higher across most loan purposes.
