Malaysia’s economy grew by 5.9% in Q2 2024, exceeding forecasts. Strong household spending, labor market conditions, and export growth contributed to the positive results.
Bollywood Fever: Malaysia’s economy experienced robust growth in the second quarter of 2024, expanding by 5.9% compared to the same period last year, surpassing market expectations. This impressive growth outpaced the 4.2% increase seen in the first quarter and exceeded the 5.8% forecast in a recent Reuters poll.
The growth in the April-to-June period was driven by stronger household spending, favorable labor market conditions, and an uptick in exports and investment activities, according to a joint statement from Bank Negara Malaysia (BNM) and the Statistics Department at a press conference on Friday.
BNM Governor Abdul Rasheed Ghaffour highlighted that full-year growth is now expected to be at the upper end of the central bank’s forecast of 4%-5% for 2024. “Household spending will remain the anchor of growth for the rest of this year, with continued expansion in employment and income as well as larger policy support and strong investment activities,” he stated.
This follows a 3.7% economic expansion in 2023, a significant decrease from the 22-year high of 8.7% growth in 2022.
Malaysia’s export sector also played a crucial role in the Q2 growth, with exports rising by 9.1% in April and 7.3% in May before moderating to 1.7% in June. Overall, exports grew by 3.9% in the first half of 2024.
The ringgit currency has shown recovery since hitting a 26-year low against the U.S. dollar in February, gaining 3.3% so far this year. This recovery was partly driven by growing expectations of U.S. policy rate cuts, which alleviated pressure on regional currencies, according to BNM.
Last month, the central bank maintained its key interest rate at 3.00%. On Friday, BNM noted that while inflation is trending higher due to diesel subsidy cuts in June, it is expected to remain manageable. Headline and core inflation averaged 1.8% in the first half of 2024, with projections for headline inflation ranging between 2% and 3.5% for the year.
Malaysia’s economic outlook for 2024 remains positive, with household spending and investment activities continuing to drive growth.
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