The Malaysian economy expanded by 5.3 per cent in the third quarter of 2024 (3Q 2024), driven by strong investment activities and continued improvement in exports.
Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour said with the country’s economy having expanded by 5.9 per cent in 2Q 2024, the average growth for the first three quarters came to an average of 5.2 per cent.
He said this during the third quarter GDP press conference on Friday (Nov 15).
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Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour said with the country’s economy having expanded by 5.9 per cent in 2Q 2024, the average growth for the first three quarters came to an average of 5.2 per cent.
He said this during the third quarter GDP press conference on Friday (Nov 15).
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NewsTranscript
00:00Malaysia's latest leading indicators performance suggests further improvement of the overall
00:10economy.
00:11With the forthcoming performance, the year-to-date growth is strong at 5.2 percent, and this
00:16is well within our projection of between 4.8 to 5.3 percent.
00:22And moving into 2025, we expect growth to expand between 4.5 to 5.5 percent.
00:29And this is supported by household spending, which will remain the anchor of growth, driven
00:35by expansion in employment and income, as well as continued policy support.
00:41Furthermore, investment activities will continue to support growth amid the ongoing progress
00:47in multi-year projects, realization of the high approved investments, and the favorable
00:53financing conditions.
00:56And on the external front, higher exports and tourist spending will also continue to
01:00lift growth.
01:02The growth outlook, however, remains subject to risks from both external and domestic factors.
01:08Downside risks could stem from weaker-than-expected external demand from key export partners,
01:14further escalation of geopolitical conflicts and more protectionist policies, as well as
01:21lower-than-expected commodity production.
01:24On the other hand, growth could be higher due to greater spillovers from the global
01:29technology up-cycle and more robust tourism industry.
01:34In addition, a faster implementation of existing and new investment projects could also lead
01:41to more robust investment activity and the overall growth in the economy.
01:47Malaysia's trade performance in the third quarter remains highly encouraging.
01:51Cross-exports grew by 7.8%, and this is driven by continued external demand and the global
01:57tech up-cycle.
01:58These are evident from the sustained growth of E&E and non-E&E exports by 5.2% and 10%
02:06respectively.
02:07And we project export growth to sustain, arising from the global tech up-cycle and the continued
02:13strong demand for our non-E&E goods.
02:17At the same time, cross-imports expanded at a faster rate of 20.8%, contributed by increased
02:24imports of capital and intermediate goods.
02:28Going forward, we expect imports to remain strong, and this is driven by capital imports
02:32from investment up-cycle and intermediate imports to support higher exports in the future.
02:39Importantly, these investments will further raise exports and expand the productive capacity
02:45of the economy.
02:47Consumer spending remains as the anchor of growth, and this is supported by the continued
02:51wage increases and employment growth.
02:54Moving forward, household spending is projected to remain resilient, lifted by rising income,
03:01expanding employment opportunities, along with targeted policy initiatives to support
03:06selected households.
03:08The investment up-cycle is a key bright spot in the economy.
03:12Overall investment registered a higher growth of 15.3%, if you look at the second quarter
03:17this year at 15.5%, and this is supported by both structures and machinery and equipment.
03:25The continued implementation of new and existing projects is reflected in higher construction
03:31activities, mainly in the private sector during the quarter.
03:36Investments are also supported by the good implementation progress of key infrastructure
03:41projects such as the ECRL and the PEN-Bonyo Highway.
03:46To further support investment activity, I am pleased to announce the globalisation of
03:51the foreign exchange policy to better facilitate greater participation from global investors
03:57in key growth areas in Malaysia.
04:01And this is in line with the greater demand and interest by international financial institutions
04:06to finance the high-value investment projects in Malaysia that we have observed in the
04:11recent period.
04:14With the globalisation, multilateral development banks and qualified non-resident development
04:19financial institutions are now free to issue Ringgit-denominated bonds and sukuk for use
04:25in Malaysia and to provide Ringgit financing to resident entities.
04:31Now let me turn to inflation.
04:35Malaysia's headline and core inflation remained stable at 1.9% in the third quarter.
04:41While there were pockets of higher inflation for selected items such as diesel and vehicle
04:46insurance, this was offset by broader moderation for food and beverages inflation during the
04:52quarter.
04:54Of note, the stable underlying inflation during the quarter continues to suggest limited spillover
05:00to broader prices from the diesel subsidy rationalisation that was implemented in June,
05:05which we largely attribute to effective enforcement and mitigation measures to minimise the cost
05:11impact on businesses.
05:14Year-to-date, both headline and core inflation averaged 1.8% and are expected to remain a
05:20modus for the remainder of the year.
05:23For 2025, inflation is projected to average between 2% to 3.5%, accounting for impending
05:30domestic policy measures announced in Budget 2025, including the implementation of targeted
05:36RON95 subsidies and the expanded scope of the SST.
05:41Upside risk to the outlook remains contingent on the extent of spillovers from further domestic
05:47policy measures to the broader prices, as well as lingering risk from external developments
05:53which could drive up global commodity prices or disrupt global supply conditions.
05:59On the downside, lower domestic inflation could result from the weaker-than-expected
06:05global growth, which could weigh on global commodity prices and domestic economic conditions
06:11through weaker external demand.
06:14The banking system continued to play an important role in supporting economic growth during
06:18the quarter.
06:19Owing to their strong financial position, including the robust levels of capital and
06:25healthy liquidity buffers, banks remain well-positioned to support the financing needs of the domestic
06:31economy.
06:32In summary, the Malaysian economy expanded by 5.3% in Q3 of this year, driven mainly
06:40by stronger private expenditure and further recovery in exports.
06:47Growth prospects in 2025 remain positive, although there are risks to the outlook from
06:53both the external and domestic factors.
06:56Meanwhile, headline inflation is expected to average between 2% and 3.5% in 2025.
07:04And with that, my team and I, as well as Dr. Uzey and his team, will be happy to take questions
07:10from the media.
07:11Thank you very much.