Spending Spurs Faster Malaysia GDP Growth in Third Quarter

Malaysia’s Economic Growth Accelerates in Q3 Despite Faltering Exports

Introduction

Malaysia’s economic growth accelerated in the third quarter of this year, driven by consumer spending and the services and construction sectors. This growth has helped counter the impact of faltering exports and is in line with the country’s commitment to achieving the Sustainable Development Goals (SDGs).

Economic Growth Figures

1. Gross domestic product (GDP) expanded by 3.3% in the July-September period compared to the same period last year.
2. The economy rose by 2.6% quarter-on-quarter.

Factors Driving Growth

• Relatively low borrowing costs have shielded the economy from the global slowdown.
• Private consumption grew by 4.6% last quarter, fueled by steady employment and income prospects.
• A rebound in tourism has offset the prolonged weakness in exports.

Sector Performance

• Growth in the services sector accelerated to 5% from a year ago.
• Growth in the construction sector also quickened to 7.2% from a year ago.
• However, manufacturing contracted for the first time in two years due to weaker external demand.

Monetary Policy and Currency Performance

• Malaysia’s benchmark interest rate remains at a record discount relative to the Federal Reserve’s rate.
• The ringgit, Malaysia’s currency, has weakened about 6% this year and is the worst-performing major currency in Southeast Asia.
• Former Prime Minister Mahathir Mohamad has suggested pegging the currency to the dollar to address its depreciation.

Economic Outlook and Risks

• Malaysia’s economy is projected to expand by about 4% this year, with a growth forecast range of 4%-5% for next year.
• Risks to the growth outlook include weaker-than-expected external demand and prolonged declines in commodity production.

Inflation Outlook

• Inflation is estimated to remain modest, with an average of 2.5%-3% this year and 2.1%-3.6% in 2024.
• Upside risks to the outlook include the rationalization of subsidies and price controls, higher global commodity prices, and imported inflation from the ringgit depreciation.

Impact on Sustainable Development Goals (SDGs)

The sustainable economic growth in Malaysia contributes to the achievement of several SDGs, including:

1. SDG 1: No Poverty – Economic growth helps reduce poverty and improve living standards.
2. SDG 8: Decent Work and Economic Growth – Steady employment prospects contribute to decent work and economic growth.
3. SDG 9: Industry, Innovation, and Infrastructure – Growth in the services and construction sectors supports industry, innovation, and infrastructure development.
4. SDG 12: Responsible Consumption and Production – Consumer spending growth should be aligned with responsible consumption and production practices.
5. SDG 17: Partnerships for the Goals – Collaboration between the government, private sector, and other stakeholders is crucial for achieving sustainable economic growth.

Conclusion

Malaysia’s economic growth in the third quarter demonstrates resilience in the face of global challenges. The government’s focus on sustainable development and the SDGs has helped mitigate the impact of faltering exports. Continued efforts to promote domestic demand, strengthen key sectors, and address currency depreciation will be essential for sustaining economic growth and achieving the SDGs.

SDGs, Targets, and Indicators Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 10: Reduced Inequalities
• SDG 12: Responsible Consumption and Production
• SDG 17: Partnerships for the Goals

The article discusses Malaysia’s economic growth, consumer spending, services and construction sectors, exports, borrowing costs, tourism, manufacturing, interest rates, currency performance, employment, income prospects, government spending, inflation, subsidies, global commodity prices, portfolio investments, and policy stance. These issues are connected to the SDGs mentioned above.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries.
• SDG 9.2: Promote inclusive and sustainable industrialization and foster innovation.
• SDG 10.4: Adopt policies, especially fiscal, wage, and social protection policies, and progressively achieve greater equality.
• SDG 12.2: Achieve sustainable management and efficient use of natural resources.
• SDG 17.3: Mobilize additional financial resources for developing countries from multiple sources.

The targets mentioned above are relevant to the issues discussed in the article, such as economic growth, industrialization, innovation, reducing inequalities, responsible consumption and production, and partnerships for development.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Gross Domestic Product (GDP) growth rate
• Private consumption growth rate
• Services sector growth rate
• Construction sector growth rate
• Manufacturing sector growth rate
• Interest rate differentials
• Currency exchange rate performance
• Inflation rate
• Portfolio investments (inflows and outflows)

These indicators can be used to measure progress towards the identified targets by monitoring the growth rates, interest rate differentials, currency performance, inflation, and portfolio investments in Malaysia’s economy.

SDGs, Targets, and Indicators Table

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Source: finance.yahoo.com

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