THE Malaysian economy grew 4.2% in the year’s first quarter, compared to 2.9% in the last quarter of 2023, Bank Negara Malaysia reports.

The growth was driven by stronger private expenditure and a positive turnaround in exports, it said.

“Household spending was higher amid continued growth in employment and wages. Better investment activities were supported by higher capital spending by both the private and public sectors.

“Exports rebounded amid higher external demand,” the central bank said in a statement.

Most sectors registered higher growth on the supply side while the manufacturing sector was lifted by a rebound across both the electrical and electronic and other industries.

Stronger growth in the services sector was driven by higher retail trade activities and continued support from the transport and storage sub-sector.

Bank Negara said headline inflation remained moderate at 1.7%. It was 1.6% in the last quarter of 2023.

It said the modest rise in headline inflation reflected the adjusted water tariffs in February and the service tax for high-usage electricity in March.

Core inflation moderated to 1.8%, compared to 2% in the previous quarter,, largely driven by continued easing in the food and beverages segment.

“Inflation pervasiveness edged higher, as the share of Consumer Price Index (CPI) items recording monthly price increases rose to 44.2% during the quarter (4Q 2023: 36.3%).

“Nonetheless, this remains well below the first quarter long-term average (corresponding first quarter periods during 2011-2019) of 52.2%.”

Bank Negara said that growth in 2024 will be driven by resilient domestic expenditure with additional support from the recovery in external demand.

“On the domestic front, continued employment and wage growth will support household spending. Improvement in tourist arrivals and spending are expected to continue.

“Investment activities will be driven by progress in multi-year projects across private and public sectors, alongside catalytic initiatives announced in national master plans, as well as the higher realization of approved investments.”

It warned that the growth outlook remains subject to downside risks stemming from weaker-than-expected external demand, further escalation in geopolitical conflicts and larger declines in commodity production domestically.

But there are upside risks from greater spillover from the tech upcycle, more robust tourism activities, and faster execution of investment projects. – May 17, 2024.