Despite a challenging external environment, Malaysia’s economy grew by 3% in the fourth quarter of 2023 (Q4 2023), supported by resilient domestic demand that rose by 5.2% in Q4 2023 (Q3 2023: 4.8%). This helped cushion the 3.2% decline in Malaysia’s trade, as exports softened on the back of cooling global demand.
Overall, the Malaysian economic growth normalised to 3.7% in 2023, following a strong growth registered in the previous year (2022: 8.7%). The full-year growth for 2023 is slightly lower than the Belanjawan 2024 forecast of approximately 4%.
The growth in Q4 2023 was supported by improving economic fundamentals, among others:
- The labour market registered positive growth momentum in Q4 2023, with the unemployment rate in Q4 2023 decreasing to pre-pandemic level of 3.3% (Q3 2023: 3.4%).
- Inflation tapered to 1.6% (Q3 2023: 2%), lending credence that the Government’s strategy to rationalise subsidies had not caused a shock to the overall economy. For the month of December 2023, the headline inflation rate moderated to 1.5%. This is lower than other more developed and regional economies such as the Euro Zone (9%), the Republic of Korea (3.2%), the USA (3.4%), the Philippines (3.9%), and Indonesia (2.6%).
- Net foreign direct investment (FDI) garnered RM17.1 billion in Q4 2023 (Q3 2023: RM2 billion).
“The continued growth in domestic demand signifies that the MADANI Government’s reform agenda is starting to yield positive results. Aside from the ongoing fiscal restructuring, which mutually benefit the Government and the rakyat, efforts to enhance governance and ease of doing business have stimulated economic activities and progressively restored investor confidence in Malaysia,” said Dato’ Seri Anwar Ibrahim, Prime Minister and Finance Minister.
MADANI Government to accelerate implementation of economic reforms in 2024
After mapping out the strategy for Malaysia’s new economic growth through the Ekonomi MADANI framework, the Government will, this year, accelerate its implementation to ignite new economic growth and deliver social reform and justice.
“The MADANI Government is confident of achieving stronger growth between 4% to 5% in 2024 on the back of strong fundamentals and reforms mapped out in the Ekonomi MADANI and Belanjawan 2024,” said Anwar.
He added, “The Government is determined to further narrow the fiscal deficit to 4.3% this year, in line with commitments in the Public Finances and Fiscal Responsibility Act 2023. The Government has successfully reduced fiscal deficit to 5% in 2023 from 5.6% in 2022.”
The Ekonomi MADANI framework underscores the importance of reforming Malaysia’s economy to not only address systemic, historical challenges but also focus on new areas of sustainable growth and resilience.
Belanjawan 2024 firmly highlights the Government’s commitment to responsible fiscal management and subsidy rationalisation. Savings from these will be channelled to the vulnerable communities and the rakyat based on needs, as well as improve public infrastructure and services.
Meanwhile, strategies and measures under the National Energy Transition Roadmap, New Industrial Master Plan 2030 and Mid-Term Review of the Twelfth Malaysia Plan aim to propel quality investments in high-value-added industries, especially in the energy transition, digital and high-technology industries, ultimately creating more high-income job opportunities for the rakyat.
