Domestic Demand in Malaysia
GDP growth grows at softest pace in a year in Q1
GDP growth moderated to 5.6% year on year in the first quarter from 7.1% in the fourth quarter of last year. Q1’s reading marked the slowest growth since Q1 2022.
The downturn was broad-based, with growth in private consumption and, fixed investment weakening, and public spending exports declining year on year. Household spending growth fell to 5.9% in Q1, marking the softest expansion since Q1 2022 (Q4 2022: +7.3% yoy). In addition, government consumption deteriorated, contracting 2.2% in Q1 (Q4 2022: +3.0% yoy). Meanwhile, fixed investment growth fell to 4.9% in Q1, marking the lowest reading in a year (Q4 2022: +8.8% yoy).
On the external front, exports of goods and services contracted 3.3% in Q1, marking the worst result since Q3 2020 (Q4 2022: +8.6% yoy). Imports of goods and services also deteriorated, contracting 6.5% in Q1 (Q4 2022: +7.2% yoy).
On a seasonally adjusted quarter-on-quarter basis, GDP rebounded, growing 0.9% in Q1, contrasting with the previous quarter’s 1.7% decrease.
Commenting on the outlook, Euben Paracuelles and Rangga Cipta, economists at Nomura, said:
“We still believe the growth outlook is deteriorating and will disappoint official forecasts […]. We continue to expect GDP growth to slow sharply to 4.2% this year from 8.7% in 2022 (below [Bank Negara Malaysia’s] 4.4%), led by declining export growth, which we think will have quick negative spillover effects for domestic demand via falling wage growth and softening labor markets.”
Analysts at the EIU added:
“We maintain our view that headline growth momentum will fade starting from the second quarter. An anticipated recovery in global electronics demand will provide a tailwind to Malaysia’s goods exports by the second half of 2023, allowing headline growth to stabilise around the fourth quarter of this year.”
Malaysia Domestic Demand Chart
Malaysia Domestic Demand Data
|Domestic Demand (ann. var. %)||6.6||4.7||3.9||-4.8||3.8|