Malaysia's economy grew by 4.2% in Q1 2024

Looking ahead, the country plans to boost economic growth by increasing civil servant pay and adopting progressive pay policies.

Malaysia's economy grew by 4.2% in the first quarter of 2024, up from 2.9% in the previous quarter, driven by improved export performance and revitalised domestic demand.

The Ministry of Finance Malaysia shared in a media release that the government is confident that Malaysia's GDP will grow within the official forecast range of 4% to 5% after having exceeded Bloomberg's consensus forecast of 3.9% growth for Q1 2024.

Prime Minister and Finance Minister YAB Dato’ Seri Anwar Ibrahim commented that in spite of the turbulent global economy, Malaysia’s economy has performed strongly, which he attributed to a full set of policy reforms.

According to the media release, all sectors from the supply side expanded and catalysed economic growth in Q1 2024. 

This was demonstrated by favourable economic fundamentals during the quarter, including:

1. A strengthened labour market, with total employment reaching 16.4mn, over 50,000 new jobs created, and a low unemployment rate of 3.3%. Wages grew by 3.3% in services and 1.2% in manufacturing.
2. Inflation remained stable at 1.7% compared to 1.6% in Q4 2023.
3. The Industrial Production Index (IPI) surged by 3.3% in Q1 2024, driven by growth in electricity (8.9%), mining (5.9%), and manufacturing (2.1%).
4. Construction sector growth hit 14.2% in Q1 2024, reaching RM36.8bn, driven by expansions in civil engineering (24.7%), Specialised trade activities (11.8%), and residential buildings (11.5%).
5. Malaysia's total trade rose by 7.1% to RM690.6bn, with exports up by 2.2% and imports by 13.1%. A trade surplus of RM34.2bn was maintained.
6. The Balance of Payments current account posted a surplus of RM16.2bn, equivalent to 3.6% of GNI, driven by a surplus in goods and increased tourist arrivals. Net FDI was RM5.5bn, with significant investments in Mining & quarrying, Information and communication, and Financial and insurance/takaful sectors from Hong Kong, the US, Germany, Cayman Islands, and Bermuda.

Economy Minister Rafizi Ramli expressed optimism in a Facebook post, suggesting that if the current momentum persists, Malaysia could achieve 4-5% growth by 2024, aiming to bolster the country's financial position and meet its debt reduction target relative to economic size by 2028.

He added that despite the 4.2% growth, it will mean nothing if wages stay the same and prices stay at their present level.

"That's why Madani's administration is not looking at growth figures alone."

"Some economic policies that have been planned and put in place focus a key focus on adding money to people's pockets while we keep inflation rates under control.

"These include civil servant pay increases, progressive pay policies to ensure healthier pay rises for the private sector, and an overall review of citizens' assistance system towards more frequent and targeted cash transfers to citizens," Minister Rafizi added. 

The Ministry of Finance emphasised that ongoing initiatives such as the National Energy Transition Roadmap, New Industrial Master Plan 2030, and the 12^th Malaysia Plan will attract quality investments, create high-income jobs, and improve people's quality of life.

"Moving forward, efforts are being made to further strengthen public service delivery as well as increase productivity. 

"This is to ensure that pro-economic growth policies are executed as planned to achieve the nation’s aspiration," the Ministry added. 

READ MORE: 32,100 new jobs were created in Malaysia in Q1 2024, a 1.3% growth y-o-y 

Lead image / 123RF