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MIER projects 3.6pc growth in GDP for 4Q2023, 3.9pc for 2023

By February 8, 2024February 9th, 2024No Comments

The Malaysian Institute of Economic Research (MIER) expects the Malaysian economy to have grown 3.6 per cent in the fourth quarter of 2023. NSTP/ASYRAF HAMZAH

KUALA LUMPUR: The Malaysian Institute of Economic Research (MIER) expects the Malaysian economy to have grown 3.6 per cent in the fourth quarter of 2023 (4Q2023), contributing to a 3.9 per cent growth for the full year.

The Department of Statistics Malaysia (DoSM) will release the country’s fourth quarter gross domestic product (GDP) numbers on Feb 16, 2024.

In a statement today, MIER said the Malaysian economy decelerated in 2023 largely due to weak external demand stemming from subdued global economic conditions, declining commodity prices, geopolitical uncertainties, and a sluggish outlook in the global semiconductor markets.

“Going into 2024, MIER forecasts the Malaysian economy to expand moderately within the range of 4.3 per cent to 4.6 per cent. “Resilient domestic demand and stable labour market conditions continue to be the key drivers of growth in 2024. “Additionally, the country’s growth momentum and export performance may receive a positive boost if there is a recovery in the global semiconductor industry,” said MIER head of research Dr Shankaran Nambiar.

However, he added the government must look to temper the downside risks stemming from the sluggish outlook in China’s economy, due to weak domestic activity, a slump in the property market, and persistent deflationary pressures, increasing geopolitical uncertainties in the Middle East, a surge in financial stress in developing economies due to high interest rates worldwide, and climate change. “These are potential risks that may hinder Malaysia’s 2024 growth prospects,” he said.

MIER noted that the Consumer Sentiments Index (CSI) and Business Conditions Index (BCI) showed signs of recovery for 4Q 2023.

However, both indices remained below the 100-point threshold of optimism, suggesting that consumers and local manufacturers maintained a guarded outlook on the economy. Malaysia’s headline inflation rate remained stable at 1.5 per cent in December 2023, resulting in a full year inflation rate of 2.5 per cent for 2023.

However, the annual inflation rate for food and non alcoholic component was 4.9 per cent, roughly twice as high as the national inflation rate in 2023.

“The labour market is expected to have remained stable in Q4 2023, supported by strong labour force participation and low unemployment rate. “Moreover, the outlook for Malaysia’s external trade remained unfavourable in Q4 2023, attributed to continuous contractions in exports and a narrower trade surplus,” it added.

This article first appeared in New Straits Times, Business Times on February February 8, 2024