KUALA LUMPUR: Malaysia’s economy is expected to expand in 2024 driven by improved domestic demand and exports recovery, said Bank Negara Malaysia (BNM).
According to governor Datuk Abdul Rasheed Ghaffour, the Malaysian economy is projected to grow between 4% and 5% in 2024, which will be supported by resilient domestic demand and improvement in external demand.
“The economy is set to improve. We expect the continued expansion in domestic demand and the recovery in exports to support economic growth this year,” he told reporters when releasing BNM’s 2023 annual report yesterday.
According to him, the economy continued to show strength and resilience last year, whereby growth domestic product grew by 3.7%, despite the challenging external environment.
Concurrently, Abdul Rasheed said the outlook remains subject to downside risks emanating from both domestic and global factors.
He added that BNM’s monetary policy will continue to be forward-looking with a focus on the trajectory of growth and inflation.
Abdul Rasheed said the services and manufacturing industries are projected to be the key economic drivers this year.
“The services sector, particularly consumer-related sub-sectors, will benefit from tourism activities and favourable labour market conditions. The business-related sub-sectors will be supported by better trade and construction activities.
“The manufacturing sector is expected to grow at a stronger base, this will be driven by expansion in the electrical and electronics (E&E) cluster amid the global tech cycle rebound and improvement in regional economies will also benefit the non-E&E exports.
“In addition, resource-based manufacturing will be supported by better upstream supply conditions.”
However, Abdul Rasheed said, the agriculture sector is expected to register a small contraction, due to the impact from the El Nino weather phenomenon and the previous years underfertilisation of the nation’s crops.
Meanwhile, headline inflation is expected to average between 2% and 3.5% in 2024 amid contained cost pressures from easing global supply conditions.
“Inflation outlook remains highly subject to upside risks due to potential price adjustments on food and energy items, as well as external pressures from exchange rate and global commodity price developments.
“It is also expected to remain moderate. These favourable economic conditions in 2024 provide a window for the implementation of structural reforms as announced by the government. Pursuing these reforms, such as subsidy rationalisation, is necessary for strengthening the economy post-crisis, ultimately benefitting Malaysia in the long run,” the central bank governor remarked.
Bank Negara’s flagship publications include its Annual Report 2023, Economic and Monetary Review 2023 and Financial Stability Review Second Half 2023.
