Malaysia’s Slower GDP Growth Signals Risks Ahead
GDP Growth Slows Down
Malaysia’s economy expanded at a slower clip in the fourth quarter (Q4), signaling a challenging road ahead as the trade-reliant nation contends with heightened global risks. Gross domestic product (GDP) rose 4.8% in the October-December period from a year ago, according to advance estimates released by Malaysia’s statistics department today.
Below Expectations
That’s below the 5.2% median estimate in a Bloomberg News survey and the 5.3% expansion from July to September, marking a second straight quarter of slower growth.
Full-Year Growth
For the full year, the economy increased 5.1% in 2024, putting it within the government’s projection of a 4.8% to 5.3% growth and faster than the 3.6% pace in 2023. The final figures will be released on February 14.
Economist’s View
"It is not the home run analysts were expecting but signals strong momentum nonetheless," said Lavanya Venkateswaran, an economist at Oversea-Chinese Banking Corp. "We maintain our 2025 GDP growth forecast of 4.5% and expect Bank Negara Malaysia (BNM) to remain on hold in 2025," she said.
Uncertainty Ahead
Lavanya said while officials remain optimistic about the country’s growth amid improving foreign investments, uncertainty over the impact of Donald Trump’s trade policies threatens to undermine the economic recovery seen taking place in Malaysia. "Plans of the incoming US president to roll out tariffs, as well as China’s disappointing growth, may weigh on global demand," she said.
Sectoral Performance
Growth during the quarter was driven by the services sector. Advances in the manufacturing and construction industries slowed, while agriculture declined in the last three months of 2024.
Market Reaction
The ringgit was little changed at RM4.5017 against the dollar at 12:39 pm in Kuala Lumpur while the benchmark FTSE Bursa Malaysia KLCI Index climbed as much as 0.5%.
Economic Outlook
In a separate Bloomberg News survey, economists expect Malaysia to expand 4.7% in 2025, near the lower-end of the official projection of 4.5% to 5.5%.
Central Bank’s Decision
All analysts surveyed so far expect the central bank to keep the policy rate steady at 3% at its first meeting this year on January 22.
Conclusion
Malaysia’s slower GDP growth in the fourth quarter signals a challenging road ahead, with heightened global risks posing a threat to the country’s economic momentum. While the services sector remains a key driver of growth, the manufacturing and construction industries have slowed, and agriculture has declined. The country’s economic outlook for 2025 remains uncertain, with analysts expecting a growth rate of 4.7%.
Frequently Asked Questions
Q: What is the GDP growth rate for Malaysia in the fourth quarter of 2024?
A: 4.8%
Q: What is the median estimate for GDP growth in a Bloomberg News survey?
A: 5.2%
Q: What is the full-year GDP growth rate for Malaysia in 2024?
A: 5.1%
Q: What is the expectation for Malaysia’s GDP growth rate in 2025?
A: 4.7%
Q: What is the central bank’s policy rate expected to be at its first meeting in 2025?
A: 3%