KUALA LUMPUR: Malaysia's economy grew faster than expected at 4.2 per cent in the first quarter of 2024 (Q1 2024), supported by higher household spending.
Bank Negara Malaysia governor Datuk Abdul Rasheed Ghafour said private consumption grew by 4.7 per cent in the quarter buoyed by discretionary and necessities spending.
Other factors that acted as catalysts to growth were a turnaround in goods exports and higher tourist arrivals, improvement in labour market conditions and stronger investment activities.
"Better investment activities were supported by higher capital spending by both the private and public sectors. Exports rebounded amid higher external demand," he told a press conference here today.
The quarter under review also saw improvement in current account surplus which grew 3.5 per cent.
Abdul Rasheed said the growth was due to narrower primary income deficit and secondary income turned into surplus.
Other factors were higher goods surplus as exports level exceeded imports and narrower services deficit amid higher tourist arrivals.
Headline inflation stood at 1.7 per cent during the quarter (4Q 2023: 1.6 per cent).
"The modest increase in headline inflation reflects the policy adjustments to water tariffs in February and services tax for high-usage electricity in March, which increased by 20.8 per cent and 0.7 per cent respectively," he said.
Commenting on the ringgit, the governor said the local currency had depreciated against the US dollar by 2.4 per cent until May 15, in line with the movements of other regional currencies.
However, he stated that improvements in the ringgit were reflected after the central bank had coordinated initiatives with the government as well as government-linked companies and government-linked investment companies.
It had also improved following engagements with corporates and exporters have gained further traction, resulting in greater and more consistent flows into the foreign exchange market.
"Pressure on the ringgit has come down if you look from where we started open to actions which was on Feb 26, which brought positive outcomes," he said.
Moving forward, the governor said headline and core inflation are projected to remain moderate between 2.0 per cent and 3.5 per cent as well as 2.0 per cent and 3.0 per cent respectively.
Growth in 2024 will also be driven by resilient domestic expenditure with additional support from the recovery in external demand.