Malaysia's economy finishes 2023 on softer footing amid weak global demand

Malaysia’s economy grew slower than expected in the fourth quarter of 2023 as exports remained subdued, according to the central bank. Gross Domestic Product (GDP) increased by 3% year-on-year during the October-December period, driven by improving labor market conditions and easing cost pressures. However, this growth rate was lower than advanced estimates and analysts’ forecasts. Despite the slowdown, the central bank expects growth to improve in 2024, driven by resilient domestic expenditure and an improvement in external demand. Full-year 2023 economic growth was 3.7%, below the government’s projection and a significant drop from the previous year’s high. External factors such as slower global trade and geopolitical tensions have contributed to the moderation in Malaysia’s economic growth. Consumer prices also declined during the fourth quarter of 2023, while headline inflation decreased compared to the previous year. The central bank has maintained its key interest rate unchanged, citing risks to growth due to weaker external demand and declines in commodity production.