KUALA LUMPUR – Malaysia’s domestic demand is projected to expand by 5.3% in 2024, the Finance Ministry said in its Economic Outlook 2024 report released today.
The expansion is attributable to private sector expenditure, which continues to lead economic activities with a growth of 5.6%, contributing 4.3 percentage points to gross domestic product growth, the ministry said.
It said public sector expenditure would likely increase by 4.1% with a contribution of 0.7 percentage points to GDP growth.
Private consumption is expected to grow by 5.7%, owing to continued improvement in the labour market as well as a stronger domestic economy and social activities, it said.
Major events, such as football’s men’s European Championship and the Paris Olympics next year, as well as the growing social commerce trend, are also expected to boost private consumption in 2024.
Meanwhile, the ministry said private investment is likely to expand by 5.4% in step with more favourable business sentiments and an improved external environment.
“As such, the private sector is expected to intensify its efforts to inject additional capital outlays into the economy.
“In addition, private investment will continue to benefit from the realisation of approved investments by the Malaysian Investment Development Authority mainly in the electrical and electronic, transport equipment as well as information and communications subsectors,” the ministry shared.
Public investment is projected to increase by 8.3% in 2024, supported by higher federal government development expenditure and non-financial public corporations expenditure.
Meanwhile, public consumption is expected to grow by 2.6%, driven by higher spending on supplies and services to improve public service delivery, coupled with the effort to spend more effectively and efficiently.
In line with the expansion in domestic economic activities, the gross national income at current prices is predicted to increase by 6.2% next year, while gross national savings is anticipated to expand by 2.9% to RM471.8 billion, with total investment envisaged to increase by 3.3% to RM409.6 billion.
Additionally, the ministry said the services sector is projected to grow by 5.6% in 2024, driven by expansion in all subsectors.
Vibrant tourism-related activities and continuous consumer spending would likely spur the growth of the services sector further.
It said the wholesale and retail trade subsector would remain the key contributor to the services sector with an expected growth of 5.6%, driven by the expansion in the retail segment via wider automation, e-commerce, and omnichannel shopping experience, enabling seamless physical and online interactions.
According to the report, the manufacturing sector is forecast to expand by 4.2% in 2024, bolstered by better performance in both export and domestic-oriented industries.
Export-oriented industries would likely benefit from the recovery of external demand, with the E&E segment projected to surge, primarily driven by memory products.
“This is in line with the rebound in demand for technologically advanced products. Similarly, domestic-oriented industries are anticipated to grow steadily backed by higher output in transport and construction-related segments, in tandem with better consumer spending and business activities,” it noted.
Furthermore, the agriculture sector is forecast to grow by 1.2% in 2024, driven by expansion in most subsectors, particularly oil palm, other agriculture and livestock.
The mining sector is also set to rebound by 2.7% next year, led by remarkable performance in natural gas as well as crude oil and condensate subsectors.
The construction sector would likely expand by 6.8% in 2024, following a better performance in all subsectors. – October 13, 2023