Malaysia’s economy grows 5.9% y/y in Q2, just above forecasts

KUALA LUMPUR : Malaysia’s economy grew 5.9 per cent in the second quarter from a year earlier, surpassing market expectations, the government and central bank said on Friday.
The growth in the April-to-June period compared with annual growth of 4.2 per cent in the first quarter.
It was also above the 5.8 per cent forecast in a Reuters poll and advance estimate released by the government last month.
Growth in the quarter was driven by stronger household spending, positive labour market conditions, and a pick-up in exports and investment activities, Bank Negara Malaysia (BNM) and the Statistics Department said at a joint press conference.
Full-year growth was now expected to be at the upper end of the central bank’s forecast of 4 per cent-5 per cent growth in 2024, BNM Governor Abdul Rasheed Ghaffour said.
“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 said.
The economy expanded 3.7 per cent in 2023, a sharp drop from a 22-year high of 8.7 per cent in 2022.
Malaysia’s exports rose an annual 9.1 per cent in April and 7.3 per cent in May, respectively, before moderating to 1.7 per cent in June. Government data showed exports grew 3.9 per cent in the first half of 2024.
The ringgit currency has recovered since hitting a 26-year-low against the U.S. dollar in February, and has now gained 3.3 per cent so far this year. This was due in part to growing expectations of U.S. policy rate cuts, which has alleviated pressure on regional currencies, BNM said.
Last month, the central bank held its key interest rate steady at 3.00 per cent. It said on Friday that inflation would remain manageable even as it trended higher following diesel subsidy cuts in June.
Headline and core inflation averaged 1.8 per cent in the first half of 2024, BNM said. It projects headline inflation will range between 2 per cent and 3.5 per cent for the year.