Malaysia: GDP growth soars in Q2
According to an advance release, annual GDP growth jumped to 5.8% in the second quarter, up from the 4.2% in the first quarter. Q2’s reading marked the best result since Q4 2022, notably exceeding market expectations. The improvement was led chiefly by the manufacturing, services, agricultural and construction sectors. A low base effect also flattered the reading.
Agricultural output growth shot up to 7.1% year on year in Q2, from Q1’s 1.6% rise. Manufacturing activity rose by 4.7% year on year in Q2 (Q1 2024: +1.9% yoy), hitting the quickest growth rate in nearly two years. Additionally, construction activity expanded by 17.2% in Q2 (Q1: +11.9% yoy). Lastly, the services sector improved from Q1’s 4.7% rise to a 5.6% expansion, marking the sharpest rise since Q1 2023. On the flipside, mining and quarrying output lost some steam, with growth cooling to 3.3% in Q2 (Q1: +5.7% yoy).
A more detailed breakdown will be released on 16 August.
United Overseas Bank analysts Julia Goh and Loke Siew Ting commented on the outlook:
“The ongoing global tech upcycle, higher tourist arrivals and spending, continued investment flows and implementation of catalytic initiatives under the national master plans remain key growth catalysts amid lingering external uncertainties (i.e. geopolitical tensions in the Middle East, China’s economic growth trajectory and US presidential elections on 5 Nov). Moreover, a continuation of government support via targeted cash assistance and subsidies for lower and middle-income groups, coupled with a proposed salary hike for civil servants and withdrawals from Employees Provident Fund (EPF)’s Account 3 or Flexible Account will provide a fillip to private consumption.”
EIU analysts said:
“With strong growth on all fronts, our previous forecast of 4.4% growth for 2024 now looks overly cautious. We are optimistic that Malaysia will maintain its growth momentum in the coming months, driven by the continued recovery in the electrical and electronics industry, strong consumer confidence, and major infrastructure projects. We are likely to revise up our 2024 growth forecast when the full second-quarter GDP data are released on August 16th.”