People wearing face masks walk in front of the Petronas Twin Towers in Kuala Lumpur, Malaysia, Jan 29, 2021. (PHOTO / XINHUA)
Malaysia’s gross domestic product is expected to expand by over 4 percent this year, surpassing last year while driven mainly by trade and investments, including from China, analysts said.
Moreover, according to Prime Minister Anwar Ibrahim, Southeast Asia’s third-biggest economy is also focusing on low carbon technology and extending targeted subsidies to promote sustainable and inclusive development.
The country’s GDP rose by 3.9 percent in the first three quarters of 2023. The government has yet to announce the GDP growth rate for the whole year, but Prime Minister Anwar said during the finance ministry’s assembly on Jan 9 that economic indicators in 2023 were “positive and encouraging”, and that the GDP growth recorded in January to September was in tandem with the targeted 4 percent for 2023.
Anwar, who is also the finance minister, said in his Jan 9 speech that the inflation rate dropped from 4 per cent in November 2022 to 1.5 in November last year. Over 350 billion ringgit in investment commitments approved were also within the first nine months of 2023, which were 6.6 percent higher than the same period in 2022
Alicia García Herrero, chief economist for Asia Pacific at Natixis, is optimistic that Malaysia’s GDP this year can surpass that of 2023, thanks to an influx of investments from China.
“I think this is a very good time for Malaysia,” Garcia Herrero told China Daily. She said that most of the Chinese investments went to the semiconductor and electric vehicles manufacturing sectors. The labor force scarcity in Vietnam is attracting more foreign investors to go to Malaysia, she added.
China is among the biggest sources of foreign direct investment for Malaysia. In the first nine months of 2023, China invested a total of 11.6 billion ringgit ($2.5 billion) in the country, according to the Malaysian Investment Development Authority.
“There was a structural shift in underlying growth in Malaysia due to the shock of the COVID-19 pandemic which caused a lot of damage and scarring (to the economy). This lowers the underlying growth potential to between 3 to 4 percent, which is what we expect in 2024,” said Geoffrey Williams, professor and dean of the Institute of Postgraduate Studies at the Malaysia University of Science and Technology
He said a better fiscal position with only slightly higher spending, higher revenue and a lower deficit can support growth. Williams also complimented Malaysia’s stable monetary policy and expected the overnight policy rate to remain at 3 percent for the year.
Maybank Investment Bank sees Malaysian GDP to be firmer in 2024, with growth projected at 4.4 percent. The expansion will be underpinned by resilient consumer spending, sustained private and infrastructure investment and recovery in trade, services and manufacturing industries.
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Maybank said in its annual economic outlook that 2024 should be a takeoff year for Malaysia’s medium-to-long-term economic transition as outlined in the blueprints, master plans, roadmaps and legislation that the government had announced last year. These plans include the Madani Economy, an economic framework that aims to transform Malaysia into one of the 30 biggest economies in the world; the National Energy Transition Roadmap and the New Industrial Master Plan.
Anwar, who is also the finance minister, said in his Jan 9 speech that the inflation rate dropped from 4 per cent in November 2022 to 1.5 in November last year. Over 350 billion ringgit in investment commitments approved were also within the first nine months of 2023, which were 6.6 percent higher than the same period in 2022. But he said that consumer prices were still increasing and that implementing targeted subsidies would allow the government to channel more cash aid to those in need, according to the New Straits Times.
Serina Abdul Rahman, lecturer on Southeast Asian Studies at the National University of Singapore (NUS), said that Malaysians, especially those in the rural areas, are “less interested” in macroeconomic planning and announcements.
“They want to see these things implemented and fast, such as (targeted) petrol subsidies. But the need to re-register under a new system is difficult for poor rural folk,” Serina told China Daily. She said the government needs to “think closer to the ground” to make it easier for people to adapt to new programs, enabling them to access services even if they do not have a phone and internet access.
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“Costs of living are skyrocketing — the price of daily items have at least doubled, and it's hard to find essentials such as cheap rice, eggs and sugar,” Serina said.
