Taking a look at Malaysia’s economic performance in Q3 2024

Medium-term growth is expected to moderate to 3.1% as structural challenges such as aging populations and low productivity still remain prevalent.

Malaysia as a whole has seen a positive trend of growth within its economy. The Department of Statistics Malaysia (DOSM) released the Malaysian Economic Statistics Review (MESR) Volume 11/2024 on 29 November, revealing the economic situation of the country for the month of October and key data for the third quarter (Q3) of the year.

It has been reported that the global economic growth has remained steady with the International Monetary Fund (IMF) forecasting a growth rate of 3.2% for years 2024 and 2025 following its October 2024 outlook. Medium-term growth is also expected to moderate to 3.1% as structural challenges such as aging populations and low productivity still remain prevalent. Fortunately, strong domestic demands and post-pandemic recovery continue to drive short-term improvements.

Commenting on the nation’s performance, Chief Statistician Malaysia Dato’ Sri Dr. Mohd Uzir Mahidin said the economy grew by a smaller percentage as compared to the previous year, recording 5.3% and 5.9% respectively. He also cited the services, manufacturing, and construction sectors as key drivers of Malaysia’s economy, while private consumption and the increased spending on gross fixed capital formation played significant roles as well.

Economic performance by sector

In September 2024, the Industrial Production Index increased by 2.3% year-on-year. The manufacturing and electricity sector made up 3.2% and 3.9% of the growth respectively. On the other hand, the mining sector reduced its contribution to the index to 2.2%.

In Q3 as a whole, the IPI grew by 3.9%, mainly supported by the Manufacturing and Electricity sector.

Diving into individual sectors, although slower than the previous record of a 7.7% growth, the manufacturing sector attained a sale value of RM162.3bn which equates to a 2.9% increase year-on-year.

This growth was spearheaded by the electrical & electronics (5.8%), food, beverages & tobacco (5.6%), and non-metallic mineral products (5.1%) sub-sectors.

In the services sector, a revenue of RM618.5 bn was attained in Q3 2024, marking a 5.9% year-on-year increase, mostly driven by the wholesale & retail trade, food & beverage, and accommodation sectors, all in all contributing RM469.5 bn.

Snapshot of how the labour market fared

On the laour front, Malaysia’s labour market continued its positive trajectory in September 2024, with the labour force growing by 0.1% to 17.24mn and the labour force participation rate (LFPR) rising to 70.5%.

At the same time, the country's employment rate increased by 0.2% to 16.69mn, while the unemployment rate kept steady at 3.2%.

Throughout Q3 2024, the total labour force expanded by 2.6% year-on-year to 17.26mn. LFPR saw an improvement from 70.1% to 70.5% within a year.

[ALSO READ: Malaysia's labour demand records 9.01mn jobs in Q3 2024]

Inflation and overall peformance

Analysing inflation, Malaysia’s inflation rate eased to 1.8% in September 2024, followed by slower inclines in main groups — namely personal care (3.1%) and transport (1.1%). However, the Consumer Price Index (CPI) increased by 1.9% in October while the Producer Price Index decreased by 2.1% in September. This was a result of significant declines faced by the mining and manufacturing sectors which fell by 16.1% and 1.5% respectively.

The above aside, the Ministry of Investment, Trade and Industry (MITI) also noted recent investment data that revealed the success of National Investment Aspirations, driving high-quality investments. In particular, the Average Capital Investment Per Employee (CIPE) rose to RM1.8mn, a RM100,000 increase compared to last year. This demonstrated the increasing capability of the investment sector in providing high-skilled jobs.

READ MORE: How informal and formal sector employment fared in Malaysia in 2023: DOSM