Malaysia’s economic growth rebounded to 4.2% in Q1 2024, up from 2.9% in Q4 2023

Breaking it down, all sectors demonstrated better growth, with the services and manufacturing sectors continuing to drive the overall performance.

According to the World Bank’s most recent projection in June 2024, the global economy is forecasted to stabilise for the first time in three years. Global economic growth is expected to maintain at 2.6% in 2024, followed by an increase to an average of 2.7% in 2025 and 2026. 

Even with the stable growth forecast, the projection still remains below the 3.1% average recorded in the decade prior to the COVID-19 pandemic. As a whole, the economic expansion of over 80% of the world population is estimated to grow at a slower pace. 

Reflecting a similar sentiment more locally, Malaysia's economy moderated to 3.6% in 2023, down from 8.9% the preceding year. This was mainly attributed to the services and manufacturing sectors, which contributed 82.6% of the Gross Domestic Product (GDP). As a result, Malaysia's GDP at current prices amounted to RM1.82tn in 2023, and RM1.57tn at constant prices.

In the first quarter of 2024, Malaysia’s economic performance expanded to 4.2% from 2.9% in the previous quarter, according to the Department of Statistics' latest report.

Breaking it down, all sectors demonstrated better growth, with the services and manufacturing sectors continuing to drive the overall performance; the services sector grew at 4.7% (compared to 4.1% in Q4 2023), backed by the wholesale and retail trade, transportation and storage, and business services sub-sectors.

In April 2024, the manufacturing sector recorded a sales value of RM153.2bn — the highest in 13 months, following an increase of 5.7% as compared to RM145bn reported the previous year. The growth was largely fuelled by sales in the sub-sectors of:

• transport equipment & other manufactures (16.9%);
• non-metallic mineral products, basic metal & fabricated metal products (12.8%), and
• electrical & electronics products (2.7%).

Looking at the month-on-month growth, the sales value contracted 3.3% as compared to a growth of 8.4% in March 2024. At the same time, the Industrial Production Index (IPI) increased further by 6.1% in April 2024, up from 2.4% the preceding month. This was boosted by the expansion across all sectors, namely manufacturing (4.9%), mining (10%), and electricity (7.6%).

In tandem, total trade in Malaysia recorded a growth of 10.3% or RM23bn, in May 2024 to reach a value of RM246.3bn (2023: RM223.3bn).

• The value of exports rose by 7.3%, or RM8.7bn, to a total of RM128.2bn as compared to the same month in 2023.
• The value of imports continued its growth by 13.8%, or RM14.3bn, to post a value of RM118.1bn as compared to the same month in 2023.

Labour force records steady growth in employment levels

Complementing all this, Malaysia's labour market maintained its positive growth, with a steady rise in employment levels nationwide.

Breaking this down, the number of employed persons increased by 0.1% in April 2024, adding 23,500 persons compared to the previous month. This brought the total employed population to 16.56mn persons from 16.53mn the previous month. On a year-on-year basis, the number of employed persons also recorded a surge of 1.9% or an additional 304,300 persons (April 2023: 16.25mn persons).

Meanwhile, the employment-to-population ratio, an indicator of an economy’s ability to create employment, also grew 0.1 percentage points (p.p), reaching 68% (March 2024: 67.9%). On a year-on-year comparison, the ratio increased by 0.5p.p from 67.5% in April 2023.

Looking at the statistics by status in employment:

• The employees’ category remained the largest category, at 75.1% of all employed persons. This category experienced a monthly increase of 0.1% (or 12,300 persons), reaching approximately 12.43mn persons (March 2024: 12.42mn persons).
• Reflecting a similar trend, the own-account workers category also experienced an upward trend, with a month-on-month increase of 0.3% (+9,100 persons), reaching a total of 3.04mn persons during the month (March 2024: 3.03mn persons).
• The number of employed persons temporarily not working dipped by 2.5%, dropping to 82,400 persons in April 2024 (March 2024: 84,600 persons). Annually, this category showed a 4.7% decline (4,100 persons) from 86,500 persons.

In the meantime, the number of unemployed persons also continued its downwards trend by a marginal 0.04% to reach 566,400 persons. For reference, March 2024 recorded 566,600 persons. This records a gradual approach to the pre-pandemic levels of 519,000 persons in 2019.

Lastly, the number of the labour force in April 2024 continued to expand with an increase of 0.1% from the previous month. This translates to a growth of 23,400 persons to record 17.12mn (March 2024: 17.10mn persons).

With this, the labour force participation rate (LFPR) remained unchanged at 70.3%. On a year-on-year basis, the number of the labour force rose by 1.7% (283,700 persons) compared to the same month of the previous year (April 2023: 16.84mn persons).  Subsequently, the LFPR grew by 0.3p.p from the same month of the previous year (April 2023: 70%).

On the other hand, the number of persons outside the labour force during April 2024 registered a slight increase 600 persons (0.01%) to 7.23mn persons (March 2024: 7.23mn persons). As the report identifies, the two main reasons for being outside the labour force were due to housework/ family responsibilities (share: 42.7%) and schooling/ training (share: 41.4%).

In the next phase, Malaysia’s labour market is expected to demonstrate resilience and stability alongside economic growth in the upcoming months, boosted by favourable domestic economic conditions and a recovery in external demand.

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Lead image / Department of Statistics Malaysia