Economy Achieves Growth Of 5.6% In First Quarter 2023

The Malaysian economy expanded by 5.6% in the first quarter of 2023 (Q1 2023), comparing favourably with regional growth such as Indonesia (5%), China (4.5%) and Vietnam (3.3%). The Q1 2023 growth performance contributed strongly towards the achievement of the 2023 whole year forecast of 4.0% to 5.0%.

The Q1 2023 growth also exceeded the 4.8% growth achieved in Q1 2022. On a quarter-on-quarter seasonally adjusted basis, the economy grew by 0.9% in Q1 2023 compared to the contraction of 1.7% in Q4 2022.

“Malaysia’s economic performance in the first quarter of 2023 was underpinned by broad based growth across all sectors especially services and manufacturing, which grew by 7.3% and 3.2% respectively. The economic expansion was supported by sustained domestic demand reflecting confidence in the economy, given strong private expenditure and improvement in labour market conditions,” noted YAB Dato’ Seri Anwar Ibrahim, Prime Minister and Finance Minister.

The labour market continued to record a positive growth momentum in Q1 2023, maintaining its full employment level with 3.5% unemployment rate (Q4 2022: 3.6%). Meanwhile, inflation rate in Q1 2023 moderated to 3.6% (Q4 2022: 3.9%) due to, among others, the Government’s continued implementation of price control measures and consumer subsidies. Domestic inflation continues to trend downwards to 3.4% in March 2023 (Feb 2023: 3.7%), which is much lower than some advanced and regional countries such as the UK (10.1%), the Philippines (7.6%), Singapore (5.5%), the US (5%) and Indonesia (5%).

ECONOMIC PROSPECT REMAINS STRONG DESPITE GLOBAL CHALLENGES

In line with the recent global economic forecast by the International Monetary Fund (IMF) and World Bank, the Malaysian GDP growth is expected to moderate in 2023 due to slower external demand as a result of weakening global trade. Geopolitical tensions, elevated price pressures and tighter financial conditions will also continue to affect world economic outlook.

Meanwhile, on the domestic front, extreme climate occurrences such as the current heat wave phenomena and the expected El Nino season starting in June 2023 are expected to weigh on economic activities to a certain extent, especially on the agriculture and construction sectors.

“Despite these global economic challenges and uncertainty, the Government is confident of achieving our growth forecast of 4.0% – 5.0% for 2023, supported by Malaysia’s strong economic fundamentals and implementation of Belanjawan 2023 measures. The Government will continue to prioritise addressing the daily economic challenges faced by Malaysians while focusing on reducing wastage and tackling corruption,” said YAB Dato Seri Anwar.

Ministry of Finance
Putrajaya
12 May 2023