KUALA LUMPUR–The Malaysian economy grew at its slowest pace in almost three years in the second quarter, falling short of economist forecasts.
According to Bank Negara, gross domestic product (GDP) increased by 2.9% compared to the same period last year, supported by higher domestic demand, a strengthening labor market, and a recovery in tourism.
This growth rate is significantly lower than the 5.6% expansion recorded in the first quarter and marks the lowest GDP figure since a contraction of 4.2% in the third quarter of 2021. Economists surveyed by Dow Jones Newswires had predicted first-quarter GDP growth of 3.7% on a yearly basis.
The central bank reported that seasonally adjusted GDP grew by 1.5% in the second quarter. However, it noted that this moderated growth was partly attributed to weaker external demand due to a global technology downturn, lower commodity production, and a high base.
Bank Negara is anticipating economic growth to be in the range of 4% to 5% and considers domestic demand as the primary driver of growth, especially given the current challenging global environment.
The central bank also highlighted that the continued improvement in the labor market, the implementation of new and existing long-term investment projects, and an increase in tourism are all factors expected to contribute to domestic economic growth.
Looking ahead, Bank Negara expects headline and core inflation to trend lower in the second half of the year, partly due to a high base. However, it cautioned that uncertainties in the inflation outlook may arise from changes in domestic policies regarding subsidies, fluctuations in global commodity prices, and developments in financial markets.
The following are selected economic indicators released by the central bank:
- 2Q Gross Domestic Product: +2.9%
- Manufacturing: +0.1%
- Services Sector: +4.7%
- Mining Sector: -2.3%
- Agriculture Sector: -1.1%
- Private Sector Consumption: +4.3%
- Public Sector Consumption: +3.8%
