Malaysia's Economic Growth Was Stronger Than Expected in the First Quarter

By Ying Xian Wong

KUALA LUMPUR--Malaysia's economy expanded more than initially estimated in the first quarter, supported by stronger private-sector expenditure and a turnaround in exports.

Gross domestic product rose 4.2% from a year earlier in the first quarter, revised figures from the central bank showed on Friday. That compared with advance estimates in April that had tipped growth at 3.9%.

The quarterly print beat economists' expectations, with a poll of economists by The Wall Street Journal pegging growth at 3.9%, and topped the 3.0% on-year expansion recorded in the fourth quarter last year.

The expansion in the first three months of the year was driven by higher growth across most sectors, the bank said.

Exports returned to growth, rising 2.2% versus the 6.9% contraction recorded in the fourth quarter last year. Exports are expected to keep improving steadily, supported by strengthening external demand, the bank added.

Stable growth will give the central bank room to keep policy settings steady. Most economists expect Bank Negara to stay on an extended pause, seeing little to pressure it to move on rates if inflation stays benign and growth remains solid.

Bank Negara expects economic growth at 4.0%-5.0% in 2024, but warned that this outlook is subject to external and domestic risks, like geopolitical conflicts and declines in commodity production. It expects demand at home and abroad to keep supporting Malaysia's economic growth.

The central bank reiterated its view that inflation will stay in check this year, as headline inflation remained moderate during the first quarter and core inflation eased as food and beverage prices cooled.

For 2024, headline and core inflation are projected at 2%-3.5% and 2%-3%, respectively. But the bank warned that this is highly dependent on factors like the paring back of government subsidies and price controls, and financial market developments.

Domestic markets continue to be driven by shifting expectations over the monetary policy path of major central banks, it said.

Following are selected economic indicators released by the central bank.

 
                              1Q     4Q 
Gross Domestic Product     +4.2%  +2.9% 
Manufacturing              +1.9%  -0.3% 
Services sector            +4.7%  +4.1% 
Mining sector              +5.7%  +3.5% 
Agriculture sector         +1.6%  +1.9% 
Construction sector        +11.9% +3.6% 
Private sector consumption +4.7%  +4.2% 
Public sector consumption  +5.8%  +7.3% 
 
 

Write to Ying Xian Wong at [e-mail]

(END) Dow Jones Newswires

05-17-24 0016ET