The Malaysian economy exceeded expectations by growing at a rate of 5.9% in the second quarter of the year, as announced by the government and central bank. This growth outpaced the 4.2% growth seen in the first quarter and was higher than the 5.8% forecasted in a Multibagger poll. The increase in economic activity was driven by stronger household spending, positive labor market conditions, and a rise in exports and investment activities.
BNM Governor Abdul Rasheed Ghaffour stated that full-year growth is expected to be at the upper end of the central bank's forecast of 4%-5% for 2024. Household spending is projected to continue supporting growth, along with expansion in employment and income, as well as strong investment activities. Malaysia's exports also showed positive growth, with a 9.1% increase in April, 7.3% in May, and 1.7% in June.
The Malaysian ringgit has strengthened against the U.S. dollar, gaining 3.3% so far this year after hitting a 26-year low in February. This improvement can be attributed to expectations of U.S. policy rate cuts, which have eased pressure on regional currencies. BNM kept its key interest rate steady at 3.00% last month, anticipating manageable inflation levels despite a slight increase following diesel subsidy cuts in June.
Headline and core inflation averaged 1.8% in the first half of 2024, with BNM projecting headline inflation to range between 2% and 3.5% for the year. Overall, Malaysia's economic performance in the second quarter indicates a positive trend, with continued growth expected for the rest of the year.