Msia records moderate 4Q23, expect better GdP in 2024
KUCHING: Malaysia’s economic growth moderated on a year-onyear (y-o-y) basis in the fourth quarter of 2023 (4Q23) at 3.7 per cent but analysts are confident that the country’s growth will likely pick up to 4.7 per cent in 2024.
In a report, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) noted that Malaysia’s GDP growth moderated to 3.0 per cent y-o-y in 4Q23 (3Q23: 3.3 per cent y-o-y), below expectations as well as an advance estimate of 3.4 per cent y-o-y.
For the full year, the economy expanded 3.7 per cent in 2023 (2022: 8.7 per cent y-o-y). The moderation was underpinned by a continued and steeper contraction in external demand, while the sustained growth was anchored by still upbeat domestic demand conditions.
It also pointed out that Malaysia’s current account still remained in surplus but shrank to RM0.25 billion, the smallest quarterly surplus since the BOP statistics started.
In terms of percentage to GDP, the size of current account surplus also dropped to historical low of 0.1 per cent (3QCY23: 2.0 per cent of GDP).
In 2023, Malaysia’s current account registered the smallest yearly surplus of RM22.8 billion, it said, with the ratio to GDP declining to a new low of 1.3 per cent.
This highlights the extent of weak external trade to Malaysia’s economic activities last year.
Nevertheless, it expected the ratio of current account surplus will bounce back to around two per cent of GDP as it expect external trade to recover this year.
MIDF Research also opined: “We forecast Malaysia’s GDP growth will strengthen to 4.7 per cent this year after the more moderate growth last year (2023: 3.7 per cent) that was dragged by external trade performance as well as moderation in private sector spending.
“Understandably, the moderation in growth last year also reflected a more normalised growth with the absence of low base effect from pandemicinduced slowdown.
“We postulate the stronger growth this year can be achieved taking into account the external trade recovery, as we foresee improvement in E&E exports and growing external demand from major markets like China and the US.”
It also expected economic growth this year will continue to be anchored by sustained rise in domestic spending, backed by healthy labour market, rising income and continued recovery in tourist arrivals (and spending).
“Nevertheless, we remain cautious that external developments like slower growth in China, possible recession risk in the US and disruption to global trade from intensified geopolitical tensions could be the downside risks to Malaysia’s growth prospects in 2024.
“On the domestic front, we opine that the possible upward price pressures may result in constrain consumers’ purchasing power and their spending,” it added.