Economic Focus: Domestic economy remains resilient

15 November 2023


  • Malaysia’s economic activity remains supported by resilient domestic demand. Based on advance estimates, 3Q2023 GDP grew 3.3% y-o-y, taking 9M2023 GDP growth to 3.9%.
  • The Services sector continues to be the key growth driver given sustained strength in household spending and steady improvement in the tourism industry.
  • The Manufacturing sector contracted in 3Q2023 as the resilient domestic demand was more than offset by weak external demand. However, the weakness in the sector may have bottomed out.
Sustained domestic demand in Malaysia
  • Malaysia’s economy grew 3.3% y-o-y and 5.2% q-o-q in 3Q2023, underpinned by healthy household spending as wages and employment continued to increase.
  • The Services sector, accounting for 59% of the economy, staged a strong recovery of 4.9% q-o-q after two successive quarters of contraction, reflecting Malaysia’s resilient fundamentals.
  • 9M2023 GDP growth of 3.9% is on track to meet the government’s revised forecast of 4.0% (from a range of 4.0%-5.0% previously) for 2023.
External weakness dragged manufacturing sector
  • Slow external demand spilled over to the manufacturing sector in 3Q2023 as export-oriented industries contracted.
  • On a q-o-q basis, 3Q2023 manufacturing sector climbed 3.5% as manufacturing production improved for both domestic and export-oriented industries.
  • Narrowing exports decline among key Asian trading hubs suggests that the manufacturing downturn may be bottoming out.
Regional Highlights