Domestic demand helps Malaysia’s economy grow 5.6% in Q1-2023

Malaysia’s Gross Domestic Product (GDP) in the first quarter of 2023 expanded 5.6 per cent after recording a growth of 7.1 per cent in the previous quarter. In terms of quarter-on-quarter seasonally adjusted, GDP grew marginally by 0.9 per cent (Q4 2022: -1.7 per cent) in this quarter.

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The Department of Statistics Malaysia (DOSM), which released GDP for the first quarter of 2023 on Friday, said that correspondingly, the monthly economic performance has grown modestly in the first quarter with a growth of 4.6 per cent, 6.6 per cent and 5.6 per cent in January, February, and March 2023 respectively.

Chief Statistician Malaysia Dato’ Dr Mohd Uzir Mahidin, said that the economic performance in the first quarter of 2023 on the supply side was driven by all sectors, particularly the services, manufacturing, and construction sectors. On the demand side, private final consumption expenditure and gross fixed capital formation continued to propel the growth of the economy this quarter.

“In terms of sectoral performance, the services sector was the main impetus of Malaysia’s economy, rising by 7.3 per cent (Q4 2022: 9.1 per cent) in Q1-2023. The favourable performance was attributed to the wholesale & retail trade (9.4 per cent), transportation & storage (17 per cent), Business services (16.2 per cent) and Food & Beverage and accommodation (12.0 per cent) sub-sectors.

Tourism Helps

“The strong growth in business services was attributed to travel agencies and related tourism activities, following an increase in tourist arrivals. On a quarter-on-quarter seasonally adjusted, the Services sector increased 1.7 per cent (Q4 2022: -1.5 per cent),” he said.

The manufacturing sector grew moderately by 3.2 per cent (Q4 2022: 3.9 per cent) in the first quarter of 2023 led by electrical, electronic & optical products (3.8 per cent) followed by transport equipment, other manufacturing, and repair (7.7 per cent) and Vegetable & animal oils & fats and food processing products (7.2 per cent).

On the contrary, wood, furniture, paper & paper products, and printing recorded a decrease of 4 per cent (Q4 2022: -2.6 per cent).

On a quarter-on-quarter seasonally adjusted, the overall manufacturing sector increased 0.5 per cent (Q4 2022: -2.6 per cent). The construction sector expanded 7.4 per cent (Q4 2022: 10.1 per cent) in the first quarter of 2023. The performance in this sector was contributed by growth in civil engineering (15.9 per cent), specialised construction activities (8.7 per cent) and non-residential buildings (6.4 per cent). Nonetheless, Residential building decreased 3.4 per cent (Q4 2022: 2.8 per cent). On a quarter-on-quarter seasonally adjusted, the construction sector increased 2.9 per cent (Q4 2022: -4.1 per cent).

The mining & quarrying sector rose 2.4 per cent (Q4 2022: 6.3 per cent) supported by all activities, mainly crude oil & condensate sub-sector which increased 4 per cent (Q4 2022: 4.3 per cent) in this quarter. 

Meanwhile, natural gas grew at a slower pace of 0.6 per cent (Q4 2022: 7.3 per cent). In terms of seasonally adjusted, this sector dropped 3.2 per cent (Q4 2022: -2.4 per cent). In addition, the agriculture sector grew marginally at 0.9 per cent (Q4 2022: 1.1 per cent) in this quarter, induced by a better performance in the oil palm (3.4 per cent) and other agriculture (2.6 per cent) sub-sectors.

Mohd Uzir added: “Private final consumption or household expenditure, which contributed 61.5 per cent to GDP, grew 5.9 per cent (Q4 2022: 7.3 per cent) attributed to the higher consumption in Transport (11.2 per cent), followed by Housing, water, electricity, gas & other fuels (8.9 per cent) and Food & non-alcoholic beverages (3.4 per cent) in the first quarter of 2023.

“On a seasonally adjusted quarter-on-quarter term, the overall performance of Private final consumption expenditure posted an increase of 2.0 per cent (Q4 2022: -2.6 per cent),” he added.