KUALA LUMPUR: Malaysia’s economy recorded a better-than-expected gross domestic product (GDP) expansion of 5.6 per cent in the first quarter of 2023, driven mainly by private sector expenditure.
Earlier, local daily The Star, citing analysts, predicted that the GDP growth for the first three months of the year to hover around 4.8 per cent.
Bank Negara Malaysia (BNM) governor Nor Shamsiah Mohd Yunus said on Friday (May 12) that the growth in 2023 was supported by a further expansion of household spending, continued investment activity, improving labour market and higher tourism activities.
She added that on a seasonally adjusted basis, the economy has recovered to its pre-pandemic levels.
“The labour market continued to strengthen in the first quarter of 2023 and is expected to remain supportive of domestic demand.
“The whole economy is no longer in crisis and, in fact, continues to gain strength,” she said when announcing the performance of the first quarter of 2023.
Malaysia’s GDP growth in the fourth quarter of 2022 stood at 7.1 per cent.
Ms Nor Shamsiah also said that during the first quarter of the year, private consumption increased by 5.9 per cent, private investment (4.7 per cent) and public investment (5.7 per cent). However, public consumption declined by 2.2 per cent due to lower supplies and services spending.
Despite regional exports continuing to contract amid weak demand for goods, Malaysia’s net exports rose 54.4 per cent on further recovery in tourism activities, she said.
On the various sectors, Ms Nor Shamsiah said the services sector was the main impetus of the economy, growing by 7.3 per cent in the first quarter of 2023 supported by both consumer and business-related service activities.
Manufacturing went up 3.2 per cent in the first quarter, agriculture (0.9 per cent), mining (2.4 per cent) and construction (7.4 per cent), she said.
The unemployment rate has further improved in the first quarter, declining to 3.5 per cent against 3.6 per cent in the fourth quarter of 2022.
“The unemployment rate gradually improved towards pre-pandemic levels, driven by steady employment growth, in tandem with the expansion in economic activity … the economy will approach full employment by the end of this year,” she said.
As for the current account, Ms Nor Shamsiah said it accounted for 1.0 per cent of the GDP in the first quarter of 2023 or worth RM4.3 billion (US$961 million), compared with 5.9 per cent or RM27.5 billion in the fourth quarter of 2022 amid smaller goods surplus on the back of moderation in external demand.
On the investment front, she said that investing in large infrastructure projects is progressing without major delays, including the East Coast Rail Line (ECRL), Light Rail Transit Line 3 (LRT 3) and Pan Borneo Highway in Sabah.
Malaysia recorded RM12 billion in foreign direct investment (FDI) in the first quarter of 2023, compared with RM19.2 billion in the last quarter of 2022, which was mainly channelled into the financial services subsector as well as mining and manufacturing services.
On inflation, Ms Nor Shamsiah said headline inflation trended lower to 3.4 per cent during the first quarter of 2023 in line with moderating costs and supply conditions, while core inflation declined to 3.8 per cent but remained elevated, reflecting resilient domestic demand.
“The current core inflation has remained high for longer, even as costs have begun to moderate, (and) strong economic activity has continued to generate demand-driven pressures which have kept inflation elevated.
“We can observe this beyond conventional demand indicators, such as in retail trade and credit card spending data or even when we go to shopping malls and restaurants and see long queues and traffic jams,” she said.
The governor added that the ringgit had shown a broadly stable performance during the first quarter of 2023 despite shifting sentiments surrounding the global economic outlook. The ringgit continues to be driven by the United States dollar developments, she said.
The local currency has appreciated by 0.1 per cent against the US dollar during the quarter under review.