Malaysia experienced a deceleration in economic growth last year, according to advance estimates. The Department of Statistics reported that the country’s gross domestic product (GDP) grew by 3.4% in the final quarter of 2023, resulting in full-year growth of 3.8%.
The quarterly growth fell short of economists’ expectations, as a WSJ poll had predicted a growth rate of 4.4%. In comparison, the third quarter of 2023 saw a 3.3% expansion. Muhammad Saifuddin Bin Sapuan, an economist at Malaysian investment bank Kenanga, had anticipated a growth rate of 3.7% for the quarter, driven by domestic demand and increased tourist arrivals during the year-end festive season.
Although Malaysia’s economic growth was primarily driven by the services sector, the pace of growth slowed down. Services experienced a growth rate of 4.7% in the fourth quarter, slightly lower than the 5.0% expansion in the previous quarter. Furthermore, services growth for the entire year dropped to 5.4% from the impressive 10.9% seen in 2022.
Meanwhile, the mining & quarrying sector rebounded with a 3.7% increase in the final quarter of 2023 after experiencing a slight decline of 0.1% in the previous quarter. On the other hand, construction-sector growth moderated, according to the Department of Statistics.
The manufacturing sector faced challenges due to weakened external demand in various countries, resulting in a meager growth rate of 0.8% for the year.
This slowdown follows a remarkable 8.7% expansion in 2022, driven by post-pandemic stimulus measures and base effects. In contrast, Malaysia’s economy shrank by 5.5% in 2020 during the depths of the crisis.
The final fourth-quarter GDP data is scheduled to be released on February 16.