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Malaysia’s Economy Grows 3.4% in Q4, Below Expectations, Amid Export Decline

Malaysia's Economy Grows 3.4% in Q4, Below Expectations, Amid Export Decline

Malaysia’s economy expanded by 3.4% in the fourth quarter of 2023, falling short of the estimated 4.1%, according to advance estimates from the Department of Statistics. The sluggish growth is attributed to a slowdown in construction and stagnant manufacturing, resulting in full-year growth of 3.8%, below the central bank’s 4% projection for 2023. The decline in exports, especially to China, played a significant role in the economic slowdown, with December shipments dropping by 10%. The ringgit remained stable, but concerns over political stability and external risks, such as the Middle East crisis, pose challenges for Malaysia’s growth in 2024.

While all major sectors saw expansion, construction growth slowed to 2.5%, and manufacturing nearly stagnated at 0.1% in Q4. The outlook for Malaysia’s economy remains uncertain, with analysts pointing to risks like political instability, a potential fallout in the Middle East crisis, and global monetary policy conditions. Malaysia’s full-year economic growth for 2023 is expected to be 3.8%, below the government’s 4% projection. The central bank is likely to keep its benchmark interest rate unchanged at 3% in the upcoming meeting on Jan. 24, with the focus on balancing growth and inflation outlook.

The final GDP figures for Q4 and 2023 will be released on Feb. 16, providing a clearer picture of Malaysia’s economic performance amid challenging domestic and international conditions.

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