Economic Focus: Domestic economy remains resilient

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.

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.

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.

The below highlights some of the recent interesting DBS regional reports. Please click on the link to read the detailed report.
2023 was going to be the year when the dollar peaked until the higher-for-longer narratives set in. This report examines the risks of USD strength on Asian currencies. (From Macro Insights Weekly: USD strength and Asian FX: Manageable risks)
The economic horizon is clouded by wars and ever rising rates. Asset markets have held up remarkably well, but are risks insufficiently priced? (From Macro Insights Weekly: Wars, high rates, asset prices)
Asia’s exporters have had a sobering year and a half since the post-pandemic recovery through early 2022. This report examines the timing for an inflection point. (From Macro Insights Weekly: When will Asia’s export engine hum?)