Malaysia’s economy is experiencing a strong rebound, with the second quarter of 2024 showing a remarkable 5.9% increase in GDP, exceeding initial estimates of 5.8%. This robust performance has prompted the central bank, Bank Negara Malaysia (BNM), to revise its full-year growth forecast upwards, now predicting a range of 4-5% for 2024. The growth surge was driven by a confluence of positive factors. Household spending remains a key driver of economic growth, fueled by continued expansion in employment and income, along with larger policy support and robust investment activities. The second quarter also saw a positive impact from a healthy labor market, a resurgence in export and investment activities, and a rebound in the ringgit.
Exports witnessed a significant uptick in the initial months of 2024, with an annual increase of 9.1% in April and 7.3% in May. While growth slowed to 1.7% in June, the overall trend remains positive, with government data indicating a 3.9% increase in exports during the first half of 2024. The ringgit, which had reached a 26-year low against the US dollar in February, has seen a significant recovery, gaining 3.3% year-to-date. This rebound is attributed, in part, to expectations of US policy rate cuts, which have eased pressure on regional currencies.
Despite the rising trend in inflation following diesel subsidy cuts in June, the central bank maintains that inflation will remain under control. In July, BNM held its key interest rate steady at 3.00%. This positive economic outlook for Malaysia signals a strong recovery from the slowdown experienced in 2023, when the economy expanded by 3.7% after a 22-year high of 8.7% in 2022.
