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This was largely driven by higher housing and utilities inflation at 3.1% (Q1 2024: 2.6%).
The Malaysian economy grew by 5.9% in the second quarter of 2024, up from a growth of 4.2% recorded in Q1, attributed to stronger domestic demand and further expansion in exports. Household spending also increased amid sustained positive labour market conditions and larger policy support.
According to Bank Negara Malaysia, other highlights include:
- Investment activity was underpinned by continued progress in multi-year projects and capacity expansion by firms.
- Exports improved amid higher external demand and positive spillovers from the global tech upcycle.
However, inflation also edged slightly higher, averaging 1.8% in the first half of 2024. During the quarter, both headline and core inflation edged higher to 1.9% For reference, Q1 2024 recorded 1.7% and 1.8% respectively. This was largely driven by higher housing and utilities inflation at 3.1% (1Q 2024: 2.6%).
Looking at currency, the ringgit appreciated by 1.3% against the US dollar, in part due to growing expectations among financial market participants on US policy rate cuts, which has alleviated pressure on regional currencies, including the ringgit.
Looking ahead, BNM expects Malaysia’s economic growth to be supported by firm domestic demand and further improvement in external demand.
Bank Negara Malaysia Governor Dato’ Seri Abdul Rasheed Ghaffour commented: "Growth in the second half of 2024 will be driven by domestic spending with continued strong support from external demand."
On the domestic front, the central bank added, household spending will be underpinned by continued employment and wage growth as well as policy measures. Externally, the ongoing global tech upcycle and continued strong demand for non-electrical and electronics goods are projected to boost exports. This would be complemented by growing tourist arrivals and spending.
In terms of inflation, BNM forecasts headline and core inflation to edge higher in the second half of 2024 mainly due to the rationalisation of diesel subsidies. That being said, BNM affirms that impact will remain manageable given mitigation measures by the Government to minimise cost impact to businesses.
Overall, headline and core inflation for the year are expected to remain within the forecast ranges of 2% ‒ 3.5% and 2% ‒ 3% respectively.
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