DOSM's review of Malaysia's economic situation in Q4 2023

"Throughout this period, the services sector remained as the impetus for the supply-side performance, with all sectors, except manufacturing, registering positive growth," Chief Statistician Malaysia, Dato’ Sri Dr. Mohd Uzir Mahidin said.

The Department of Statistics, Malaysia (DOSM) released the Malaysian Economic Statistics Review (MESR) Vol. 2/2024 on Thursday (29 February 2024), which focused on the recent statistics released in December 2023 and Q4 2023, with statistic predictions for January 2024. 

When assessing the current state of the global economy, the International Monetary Fund anticipated a global growth rate of 3.1% in 2024, with a marginal increase to 3.2% in the following year. Further, from 2023 to 2024, advanced economies are expected to grow from 1.6% to 1.5%; while the emerging market and developing economies are projected to grow from 4.1% in 2024 to 4.2% in 2025.

Chief Statistician Malaysia, Dato’ Sri Dr. Mohd Uzir Mahidin said: "In the last quarter of 2023, Malaysia's economy expanded by 3%, marking a slightly slower pace as compared to the 3.3% growth seen in the preceding quarter.

"Throughout this period, the services sector remained as the impetus for the supply-side performance, with all sectors, except manufacturing, registering positive growth," he added. 

Excerpts of the Review are as follows: 

External sector 

• Malaysia's merchandise trade in Q4 2023 contracted by 3.2% to RM695.6bn compared to RM718.3 bn in Q4 2022, due to a 6.9% decrease in exports, totalling RM366.3bn, offset by a 1.3% increase in imports, amounting to RM329.3bn.
• Consequently, the trade surplus narrowed to RM36.9bn, marking a 45.9% decrease compared to the same period last year.
• In January 2024, the total trade exhibited a double-digit growth of 13.3%, rising from RM207.2bn in January 2023 to RM234.7bn.
• Exports increased by 8.7% to RM122.4bn, while imports surged even more rapidly by 18.8% to RM112.3bn.
• This resulted in a significant 44.2% contraction in the trade surplus from the previous year to RM10.1 billion.

Malaysia's services sector 

• Malaysia's Services sector experienced notable growth in the fourth quarter of 2023.
• Revenues surged to RM591.4 billion, indicating a 6.6% year-on-year increase.
• The Services Volume Index improved by 4.1%, reaching 148.5 points.
• Growth in the sector was driven by robust performance in segments such as Wholesale & Retail Trade, F&B, and Accommodation.
• Collectively, these segments experienced a 5.9% revenue increase, totalling RM450.9bn.
• The Volume Index for these segments recorded a 4.2% rise, reaching 150.2 points.

Inflation 

• Malaysia's inflation rate remained steady at 1.5% in December 2023, showing resilience despite economic fluctuations.
• The stability in inflation was partly due to a moderate increase of 3.7% in the Restaurants & Hotels sector, contributing to the overall stability in consumer prices.
• In Q4 2023, the rate of inflation eased to 3.9% to 1.6% in the same period of 2022, indicating a positive trend in price stability over time.
• The annual Producer Price Index (PPI) continued its declining trend, standing at negative 1.3% in December 2023, reflecting a sustained decrease in production costs.
• The decline in the PPI was primarily influenced by downturns in the Mining sector (-3.4%) and additional declines observed in Manufacturing and Electricity & gas supply sectors, indicating broader economic challenges beyond consumer prices.

Labour 

• Malaysia's labour landscape improved with the rate of unemployment standing at 3.3%, 0.3% points lower in Q4 2023, compared to Q4 2022 (3.6%).
• The number of unemployed individuals decreased by 5.9% during the quarter, due to a sustained employment growth, which increased by 2.5% year-on-year.
• The labour force rose by 2.2% year-on-year, reaching 16.91mn persons, therefore maintaining a robust labour force participation rate of 70.1%. 

Read more on Q4 2023 labour market performance here.

Dato' Sri Dr. Mohd Uzir Mahidin added: “The Leading Index displayed a positive turnaround, experiencing a 0.3% growth to reach 110.1 points.
in December 2023, compared to 109.8 points in the corresponding month of the previous year.

"This notable rebound marked the first instance of positive growth following nine
consecutive months of decline, largely propelled by a significant surge of 41.5 per cent in the Number of Housing Units Approved.

"Although still below the trend of 100 points, the smoothed growth rate of the Leading Index for December 2023 indicates anticipation of improved economic performance in the foreseeable future, supported by resilient domestic demand and stable labour market." he commented. 

READ MORE: Malaysia's labour productivity by sector in Q4 2023 | Human Resources Online

Lead image / DOSM