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4Q 2023 GDP Growth Below Consensus


  • Malaysia's 4Q 2023 GDP growth moderated to 3.0% YoY (3Q: 3.3%), slightly short of our in-house estimation of 3.2% (DOSM’s advance estimate & Bloomberg’s consensus median: 3.4%). This was due to high base effect (4Q 2022: 7.1% YoY) and continuous contraction in export (4Q 2023: -6.3% YoY) which outpaced import (-2.9%). On a monthly basis, GDP growth dropped to 1.4% YoY in Dec (Oct: 3.9%; Nov: 3.8%). It was the weakest 4Q growth for the past 5 years (excluding Covid’s 4Q 2020). On a QoQ seasonally adjusted (sa) basis, the economy contracted by -2.1% (3Q: +2.6%), while the non-sa QoQ grew by 3.1% in 4Q (3Q: 5.2%).


  • On the supply side, all sectors registered growth except manufacturing. While mining & quarrying and agriculture sector have improved further because of uptick in commodities prices, services and construction moderated compared to the previous quarter (refer to the below article for sector analysis).


  • On the expenditure side (refer to Table 1), the public sector, which contributed 17.9% share to GDP recorded the highest growth rate in the quarter, where public consumption accelerated by 7.3% YoY (3Q: 5.8%) and public investment surged to 11.3% (3Q: 7.5%). Meanwhile, private consumption and investment registered slower growth of 4.2% YoY (3Q: 4.6%) and 4.0% (3Q: 4.5%), respectively. Exports and imports continued to recover, albeit still negative. Services export which recorded stellar double-digit growth (4Q: 37.3% YoY; 3Q: 21.2%) had cushioned the fall in goods exports (4Q: -12.3% YoY; 3Q: -16.0%), boosted by recovery in tourism activity.


  • For full year 2023, Malaysia economy expanded at a slower pace of3.7% YoY (2022: 8.7%; average 2017-2019: 5.0%), below government’s official target of 4.0%, dragged down by lackluster external demand particularly goods export i.e palm oil (-27.9% YoY), E&E (-3.1%), petroleum (-11.0%) & chemical products (-11.3%). This has resulted in the decline in current account surplus to a historical low of 1.2% of GDP (2022: 3.1%; average 2017-2019: 2.8%).


  • For 2024, our GDP growth forecast of 4.0% - 5.0% will be underpinned by favourable base effect, resilient domestic demand and the recovery in global trade, particularly the anticipated revival of the global semiconductor market. However, risk to the outlook is largely tilted to the downside with latest developments (upward revision in water tariff, electricity subsidy rationalisation, sales tax imposition on imported low value goods sold online and supply chain disruption from the exacerbation of geopolitical tensions (i.e. ongoing Red Sea crisis) which will result in higher cost of doing business and reduction in consumers’ purchasing power.