KUALA LUMPUR, November 18 — Bank Negara Malaysia (BNM) announced today that Malaysia’s economy expanded by 3.3% in the third quarter, surpassing expectations and demonstrating positive momentum from the previous half of the year. Despite global trade challenges, the country experienced a slight improvement over the second quarter, with consumer spending acting as a resilient driver of growth. BNM Governor Datuk Abdul Rasheed Ghaffour emphasized that weaker external demand was offset by strong domestic spending, highlighting the critical role of household consumption in sustaining economic performance.
The central bank’s data revealed that consumer confidence remained high, contributing to steady spending patterns. Businesses’ confidence in expansion and hiring further buoyed the economy, with a historical high in labor force participation at 71%. BNM forecasts continued employment expansion, attributing the positive labor market to increased income levels. Targeted cash transfers and early incentive payments for civil servants also played a role in stimulating spending. While exports faced challenges, including a 12% decline, tourism receipts provided a cushion. The third quarter saw tourism revenue surpass RM18 billion, reaching 68% of the pre-pandemic peak.
Inflation for the third quarter stood at 2%, with expectations of modest figures in the coming year. BNM highlighted the normalization of core inflation, indicating a slowdown in the rise of prices for food, services, and transport services. The central bank acknowledged potential inflationary pressures from the government’s plan to replace blanket subsidies with a targeted system and the continued depreciation of the ringgit. Despite concerns about the ringgit’s performance, Governor Abdul Rasheed expressed confidence in the currency reflecting strong underlying fundamentals in the longer run. BNM maintains its growth forecast of approximately 4% for the year.
