How Malaysia's economy performed in Q2 2024

On the labour front, Malaysia's labour market showed positive signs of growth, with the labour force expanding by 1.1% to 17.15mn in Q2 2024.

The Department of Statistics Malaysia (DOSM) has released the latest edition of the Malaysian Economic Statistics Review (MESR), Volume 8/2024, providing an overview of the country's economic performance in the second quarter of 2024. 

Here are some of the key findings from the report: 

"Robust" GDP growth

According to Dato’ Sri Dr. Mohd Uzir Mahidin, Chief Statistician Malaysia, the country's Gross Domestic Product (GDP) grew by 5.9% in Q2 2024, up from 4.2% in the preceding quarter, with seasonally adjusted growth at 2.9%.

"This dynamic economic performance was largely driven by the services, manufacturing, and construction sectors. 

"In the first half of 2024, the economy recorded a 5.1% increase, compared to 4.1% in the same period of 2023,” he added. 

Current and financial account balance

Current account balance 

In the external sector, Malaysia's current account balance (CAB) in Q2 2024 maintained at a favourable position, posting a surplus of RM3bn (Q1 2024: surplus RM16.2bn), primarily supported by net exports of goods. 

Financial Account balance 

Meanwhile, the Financial Account recorded a significant turnaround, with a net inflow of RM17.1bn compared to a net outflow of RM18.7bn in the previous quarter, driven mainly by net inflows in other investments and direct investments. 

Cumulatively, for the first half of 2024, the CAB achieved a surplus of RM19.2bn while the Financial Account registered a net outflow of RM1.6bn.

Industrial production and manufacturing growth

Malaysia's Industrial Production Index (IPI) rose by 5.0%, marking sixth consecutive month of growth, driven by a 5.2% increase in manufacturing with 5.4% rise in export-oriented industries.

The mining sector also rebounded with a 4.9% increase, while the electricity sector grew by 3.5%. Since January 2024, the manufacturing sector has shown steady progress, with sales reaching RM156.1bn in June, up from 5.9% in May.

The sector's growth was notably driven by electrical & electronics products, food, beverages & tobacco, and non-metallic mineral products.

Wholesale and retail trade sector

The services sector, particularly wholesale and retail trade, played a crucial role in Malaysia's economic growth, with revenue in this sector reaching RM607.1bn in Q2 2024, reflecting a 6.8% increase compared to the same period last year. 

The Services Volume Index also rose by 6.7%, underscoring the sector's significant contribution to the overall economy.

Stable inflation and producer price index

Inflation in Malaysia remained steady at 2% in both June and July 2024, consistent with the rate in May. 

This stability was influenced by price increases in sectors such as restaurant & accommodation services, food & beverages, education, and transport. 

The Producer Price Index (PPI) continued its upward trend, rising by 1.6% in June and 1.3% in July 2024, driven by growth in the mining, agriculture, forestry & fishing, and manufacturing sectors.

Labour market expansion

The Malaysian labour market showed positive signs of growth, with the labour force expanding by 1.1% to 17.15mn in Q2 2024. 

The labour force participation rate rose to 70.5%, while employment grew by 1.2%, reaching 16.59mn. 

The number of unemployed persons decreased by 0.6%, keeping the unemployment rate steady at 3.3%.

Dato' Sri Dr. Mohd Uzir Mahidin highlighted in his closing remarks that "Malaysia's Leading Index (LI) rose by 3.5% to 113.4 points in June 2024, largely due to a 42.2% surge in the Bursa Malaysia Industrial Index. 

The LI's position above 100 points reflects sustained economic resilience.

"Looking ahead, businesses in Malaysia expect an improved business environment in the third quarter of 2024, with the confidence indicator rising to +4.7% from +0.7% in Q2. 

"The outlook for the second half of 2024 remains positive, with anticipated growth across the services, industry, construction, and wholesale & retail trade sectors. 

"As a consumer-driven economy, Malaysia is likely to see further boosts in domestic demand through salary adjustments and robust tourism activities." he commented. 

In addition to the economic statistics of the above sectors, MESR also included a new article entitled ⁠"Exploring Malaysia’s Youth Labour Force” in this edition, which provides a detailed review of youth employment in Malaysia between 2015 to 2022, focusing on employment trends, persistent challenges, and emerging opportunities. 

Moreover, it explores issues such as elevated unemployment rates and skill mismatches while evaluating the effectiveness of government initiatives aimed at improving job prospects for the youth.

According to the chart, the labour participation trends in Malaysia between 2015 and 2022 were focused on three demographic categories: youth (15-24), youth (15-30), and the overall population aged 15 to 64. youth (15-24), youth (15-30), and the overall population aged 15 to 64. 

Below are the results of how each demographic fared over the years: 

Youth (aged 15-24):
2015: 42.7%
2021: Peaked at 48.7%
2022: Slight decrease to 46.1%

Youth (aged 15-30):

2015: 59.1%
2021: Peaked at 63.0%
2022: Slight decline to 61.8%

Overall Population (aged 15-64):
2015: 67.9%
2022: Gradual increase to 69.3%

The research findings also revealed the unemployment rate of youths, according to their respective age groups between 2015 to 2022:

Schooling or training programmes: 
- Largest group at 76.2% (2.9mn individuals).
- Decreased by 1.6% (-46,8000) compared to 2021.

Housework:
- Second largest group at 16.6% (624,400 individuals).
- Increased by 0.3% (+2,200) compared to 2021.

Other reasons:
- Accounts for 7.2% (131,100 individuals).
- Increased significantly by 108.8% (+142,700) year-on-year.

*'Other reasons' includes individuals pursuing further studies, those with disabilities, those not interested or who have just completed their studies, as well as those who are retired or of old age.

READ MORE: DOSM's review of Malaysia's economic situation in Q4 2023 

Lead image / DOSM