KUALA LUMPUR – Malaysia’s economy saw a robust expansion of 5.9% in the second quarter of 2024 (Q2 2024) exceeding earlier prediction of 5.8%, bolstered by resilient household spending, vigorous investment activities and a significant boost in tourism arrivals.
Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour said the central bank views Malaysia’s growth as on track to end the year near the upper end of the 4 to 5% forecast range.
The country’s economy expanded by 4.2% in Q1 2024, bringing the first half’s growth to an average of 5.05%. The gross domestic product (GDP) grew by 2.9% in Q2 2023.
“The 5.9% GDP growth in Q2 of 2024 is the highest since Q4 in 2022,” he said at the second quarter GDP press conference here, today.
In terms of sectoral performance, Rasheed noted the services sector expanded by 5.9% in Q2 2024 compared to 4.8% in Q1 2024, contributed by broad-based improvement in consumer and business-related services.
“The manufacturing sector increased by 4.7% in Q2 2024 after recording an expansion of 1.9% in the previous quarter, driven by higher growth across export and domestic-oriented industries,” he said.
On agriculture, Rasheed said the sector expanded to 7.2% in Q2 2024 versus 1.7% in Q1 2024: 1.7, contributed by stronger production in the oil palm and fisheries subsector.
Meanwhile, the construction sector recorded better growth of 17.3% in Q2 2024 compared to 11.9% in Q1 2024, supported by higher activities, particularly in the civil engineering and special trade subsectors.
He added that the mining sector showed moderate growth of 2.7% after recording 5.7% in Q1 2024, due to lower growth in the oil and gas subsector following production disruption in May.
In a statement, Rasheed said growth in the second half of 2024 will be driven by domestic spending with continued strong support from external demand.
On the domestic front, BNM noted household spending will be underpinned by continued employment, wage growth, and policy measures.
The central bank said investment activities will be driven by progress in multi-year projects across private and public sectors.
Catalytic initiatives announced in national master plans and the higher realisation of approved investments are also key drivers for investment activities.
Externally, BNM opined that the ongoing global tech upcycle and continued strong demand for non-electrical and electronics goods will lift exports.
It said improvement in tourist arrivals and spending are expected to continue.
BNM said upside risks to growth include greater spillover from the tech upcycle, robust tourism activities, and faster implementation of existing and new investment projects.
“Downside risks to Malaysia’s growth prospects stem from a downturn in external demand, an escalation in geopolitical conflicts and lower-than-expected commodity production,” it added. – August 16, 2024