Malaysia Economy Sustains Strong Growth on Investment Surge

(Bloomberg) -- Malaysia’s economy expanded as expected in the third quarter, while remaining on track to meet official forecasts on a surge in investments and increased domestic spending.

Gross domestic product rose 5.3% in the July-September quarter from a year earlier, matching the advance estimate and the median forecast in a Bloomberg News survey of analysts. On a sequential basis, the economy expanded 1.8% from the previous three months, according to Malaysia’s central bank and statistics department Friday.

Malaysia’s economy has largely recovered from last year, supporting officials’ optimism that the full-year figure may surpass the initial forecast of 4% to 5% expansion. The Finance Ministry last month raised its annual growth projection to 4.8% to 5.3%, and sees further improvement next year as it looks to raise minimum wages and position the nation as a neutral haven for global investors with Donald Trump assuming the US presidency and potentially leveling tariffs against China.

While the outcome of the US election is set to lead to volatility in financial markets in the near term, Malaysia’s resilient economy will be able to withstand the pressure, BNM Governor Abdul Rasheed Ghaffour said at a briefing on Friday.

“What’s important to note is that we are entering this period from a position of strength,” he said. “Our growth is mostly domestic demand and Malaysia has a highly diversified economy and trade partners.”

The ringgit held a 0.2% gain from earlier Friday as of 12:30 p.m. in Kuala Lumpur.

The central bank said it is liberalizing its foreign exchange policy for international financial institutions to support investments in Malaysia, given greater interest by them to finance domestic projects. Multilateral development banks and foreign development financial firms can now issue ringgit-denominated debt securities for funding in Malaysia and provide ringgit financing to resident corporates, BNM said.

This will spur the domestic bond and Islamic securities markets, with increased participation from international investors, it added. Private investments had jumped 15.5% in the third quarter while spending by the government and public companies rose 14.4%.

The central bank affirmed the finance ministry’s revised growth forecasts for 2024 and 2025. Domestic spending will remain the main anchor for the economy, fueling sustained growth, the central bank said. Investments and continued improvement in exports, amid faster import growth, will also drive expansion, it said.