Chapter 1: Economic, Monetary and Financial Developments in 2024

In 2024, the Malaysian economy registered a higher growth of 5.1% (2023: 3.6%). The growth performance was driven by improvements in domestic demand, underpinned by both private and public sector expenditure. Household spending continued to increase, reflecting improvements in employment and income levels. Investment activity recorded a strong expansion of 12% (2023: 5.5%), the highest annual growth since 2012 (19.2%). The investment performance reflected further progress of multi-year projects in both the private and public sectors, and the implementation of catalytic initiatives under the national master plans. On the external front, net exports rebounded to 2.2% (2023: -16.2%), driven by recovery in exports amid the global technology upcycle and improved external demand.

Private consumption expanded by 5.1% in 2024 (2023: 4.7%) driven by improvement in employment and income levels. Overall employment grew by 2.6% while aggregate nominal wages expanded by 2.9% and 5% in the private and public sectors, respectively. Expenditure on necessities increased mainly due to higher spending on transport, food and beverages, and housing and utilities. Meanwhile, higher discretionary spending was mainly driven by restaurant and hotel expenditures. Policy measures also continued to support households, including larger cash transfers, special incentive payment for civil servants and pensioners, and the introduction of EPF’s Akaun Fleksibel withdrawal facility.

Gross fixed capital formation (GFCF) grew by 12% (2023: 5.5%), driven mainly by the private sector. Growth was supported by higher investments across all types of assets. In particular, robust growth was recorded in structures (15.3%; 2023: 6.1%) and machinery and equipment (M&E) (9.2%; 2023: 5.2%). Evidence suggests that an investment upcycle has begun since the second half of 2023. Notably, throughout 2024, GFCF significantly outpaced GDP and private consumption growth, leading to higher share of GFCF in GDP, while GFCF levels consistently exhibited positive cyclical deviations above its long-term trend.^[9]

Private investment registered a strong growth of 12.3% in 2024 (2023: 4.6%). This marked the highest growth rate in the past decade. Growth was driven by the steady implementation of projects, amid the high investment approvals in 2023. The overall performance benefitted from improving business sentiments and increased automation and digitalisation efforts. Investment projects were mainly concentrated in the services and manufacturing sectors, especially in high-technology activities such as electrical and electronics (E&E), as well as data centre and cloud services under information and communication technology (ICT). The strong investment activity was also reflected in private sector construction work done (2024: 23%; 2023: 9.2%) and robust growth in capital imports (2024: 29.6%; 2023: 7.1%). 

Public investment expanded by 11.1% in 2024 (2023: 8.6%). The higher growth was supported by both fixed asset spending by the Government and expansion by public corporations, primarily in transportation, oil and gas (O&G) and utilities. Continued progress in large infrastructure projects such as the East Coast Rail Link (ECRL), Pan Borneo Highway Sabah, Johor Bahru–Singapore Rapid Transit System (RTS) Link and flood mitigation projects also supported growth.

Public consumption expanded by 4.7% (2023: 3.3%), supported by higher spending on emoluments as well as supplies and services. In particular, emolument spending was driven by annual salary increment and new hirings in the public sector.
 

Notes

^[9] For more details on investment cycles, please refer to ‘Deciphering Investment Cycles in Malaysia’ box article in BNM’s Economic and Monetary Review 2024