In 2023, Malaysia’s economy expanded moderately with all states recorded favourable positive growths for the year Malaysia’s economy expanded by 3.6 per cent in 2023, reaching a GDP of RM1.6 trillion.
The Department of Statistics Malaysia (DOSM) released the Gross Domestic Product (GDP) By State, 2023 today which provides insights into sectoral perspectives and the economic contributions of each state to Malaysia’s overall economic landscape.
These statistics ensued the national GDP released on May 17, 2024.
DOSM said the Services sector continued to be the driving force of the national economy, contributing 59.2 per cent, grew 5.1 per cent as against 2022. Within the same period, the Manufacturing sector, holding its position as the second largest contributor to GDP, experienced modest growth of 0.7 per cent. Similarly, the Agriculture and the Mining & quarrying sectors experienced moderate growth of 0.7 per cent and 0.5 per cent, respectively.
The Construction sector, on the other hand, sustained its momentum, achieving continued growth of 6.1 per cent.
The Chief Statistician of Malaysia Dato’ Sri Dr. Mohd Uzir Mahidin said, “At the state level, four (4) states surpassed the national growth rate which were Selangor at 5.4 per cent, Pahang 5.2 per cent, Johor 4.1 per cent, and W.P. Kuala Lumpur at 3.7 per cent.
Nevertheless, Selangor, W.P. Kuala Lumpur, Johor, Sarawak, and Penang remained the primary contributors, collectively contributing 67.7 per cent to Malaysia’s economy.”
The economic performance of Selangor, Pahang, and Johor was driven by the Services sector, followed by the Manufacturing sector. For Selangor and Johor, the expansion of its Services sector by 6.1 per cent and 5.4 per cent respectively were propelled by growth in Utilities, transport & storage, and information & communication subsectors.
Meanwhile, Pahang’s Services sector grew by 6.0 per cent, driven by Wholesale & retail trade, food & beverages, and accommodation.
In Selangor, the Manufacturing sector increased by 2.0 per cent, attributed to the expansion in Transport equipment, other manufacturing, and repair subsector (6.2%), as well as Vegetable and Animal Oils & Fats and Food Processing (10.3%). Johor’s Manufacturing sector increased by 2.8 per cent, driven by growth in Electrical, electronic, and optical products (2.9%), while Pahang experienced a 6.7 per cent growth in Petroleum, chemical, rubber, and plastic products, contributing to a 2.1 per cent increase in the state’s Manufacturing sector. Meanwhile, W.P. Kuala Lumpur achieved an economic growth of 3.7 per cent, largely impelled by its Services sector, which serves as the backbone of the state’s economy. This sector expanded by 4.9 per cent, supported by Wholesale & retail trade, food & beverages, and accommodation.
DOSM added, “Growth in the Services sector, especially in the Wholesale & retail trade, food & beverages and accommodation sector as well as Utilities, transport & storage and information & communication are able to compensate the decline of the Manufacturing sector in several states. The decline in this sector was attributed to lower production of Electrical, electronic, and optical products, primarily affected by weakened global demand, particularly for semiconductors, integrated circuits, and spare parts.” Pulau Pinang, which is the country’s main producer of electric and electronic products, recorded a fall in the Manufacturing sector at 0.5 per cent due to a 0.8 per cent drop in the production of the specific products.
However, the growth in the Services sector at 6.0 per cent offset this fall, supporting Pulau Pinang’s economic growth to expand at 3.3 per cent. Production of Electric, electronic, and optical products in Kedah, which was the country’s fourth highest producer also showed a decline of 4.6 per cent, leading to a 3.2 per cent decrease in its Manufacturing sector. Nevertheless, the state’s GDP increased to 1.6 per cent, driven by a 4.0 per cent growth in the Services sector, particularly supported by Wholesale & retail trade, food & beverages and accommodation which expanded by 5.3 per cent.
Similarly, expansions in the Services sector also have a significant impact on Kelantan’s economy, which grew by 2.6 per cent. This sector expanded at 3.8 per cent, particularly contributed by the 5.8 per cent expansion in Wholesale & retail trade, food & beverages and accommodation sector, offsetting the fall in the Agriculture and Manufacturing sectors of 0.5 per cent and 2.6 per cent respectively.
The Agriculture sector also plays an important role in driving the economic growth of the states, particularly in ensuring national food security. The strengthening of Melaka’s economy to 3.0 per cent in 2023 was bolstered not only by a 4.2 per cent increase in the Services sector but also by a notable 6.5 per cent growth in the Agriculture sector. This sector’s expansion helped mitigate the impact of modest growth in the Manufacturing sector (0.3%), due to the decline in Electrical, electronic, and optical products (-3.1%).
Terengganu’s state economy expanded by 2.3 per cent, driven by a 3.1 per cent growth in the Services sector, particularly in Government services (3.8%) and Wholesale & retail trade, food & beverages, and accommodation (3.5%). The moderate growth was contributed by the Manufacturing sector which was the second largest contributor to the state’s economy, posted a marginal growth of 0.2 per cent as compared to a resilient growth of 8.3 per cent growth in 2022.
The slowdown was attributed by the Petroleum, chemical, rubber, and plastic products which grew 0.3 per cent, as against 8.7 per cent the previous year Within the same period, the economy of Perlis grew by 2.1 per cent, supported by a 2.3 per cent growth in the Services sector, notably influenced by a 4.1 per cent expansion in Government services. W.P. Labuan’s GDP increased by 1.9 per cent, driven by a 2.2 per cent growth in the Services sector, particularly in Finance & insurance, real estate, and business services (1.6%), which are the key drivers of the region’s economy.
Meanwhile, Negeri Sembilan’s economy grew by 1.8 per cent, propelled by Services sector (4.5%), particularly in Utilities, transport & storage, and information & communication, which increased by 5.5 per cent. The state moderate economic growth was also influenced by the marginal growth of its Manufacturing sector (1.2%), influenced by the slower growth in Electrical, electronic, and optical products of 0.1 per cent (2022: 11.3%).
Sabah’s economy expanded by 1.3 per cent, driven by a 4.5 per cent growth in the Services sector (2022: 8.5%). The growth was primarily fuelled by the Wholesale & retail trade, food & beverages, and accommodation subsectors, which saw a 4.6 per cent increase.
However, Sabah’s Mining & quarrying sector, the state’s second highest contributor, contracted by 5.2 per cent, largely due to a 5.7 per cent decline in its main commodities, Crude oil & condensate. Meanwhile, the Agriculture sector, ranking third in its contribution to Sabah’s GDP, registered a marginal growth of 0.8 per cent due to 8.9 per cent decrease in the Fisheries subsector.
Sarawak remains the fourth highest contributor to the country’s GDP, registered a 1.2 per cent growth in 2023. The Services sector grew strongly by 5.4 per cent, surpassing the national Services sector’s growth rate.
However, Sarawak’s Manufacturing sector, the second highest contributor to its economy, declined by 3.9 per cent. The decline was primarily due to a 4.6 per cent decrease in Petroleum, chemical, rubber, and plastic products, particularly in refined petroleum products. This aligns with the reduction in Crude oil & condensate and Natural gas production of 2.3 per cent and 1.1 per cent respectively, resulting in a 1.0 per cent contraction in Sarawak’s Mining & quarrying sector, thus contributing to the slower GDP growth of Sarawak in 2023.
In terms of GDP per capita, the value of national GDP per capita in 2023 was RM54,612.
As for the performance by state, five (5) states recorded GDP per capita values above the national level, namely W.P. Kuala Lumpur (RM131,038), W.P. Labuan (RM83,596), Penang (RM72,586), Sarawak (RM72,411) and Selangor (RM62,492).
DOSM said: “Based on the Leading Index from January to April 2024, Malaysia’s economic outlook for 2024 shows continuous growth in the near term. This growth is anticipated as all components are projected to increase, except for Real Imports of Semiconductor.
Other indicators such as consumer confidence, industrial production, and export flows have demonstrated resilience and growth potential. These factors are expected to contribute to a stable trajectory for the Malaysian economy in the coming year.
Moreover, continued growth is evident in the improved GDP performance in the first quarter of 2024, which recorded a growth rate of 4.2 per cent compared to 2.9 per cent in the previous quarter. This favourable economic environment has also supported stable growth in the national labour market, reflected in an increase in the Labor Force Participation Rate from 70.1 per cent in the fourth quarter of 2023 to 70.2 per cent in the first quarter of 2024.
The Unemployment Rate for the first quarter of 2024 remained steady at 3.3 per cent, consistent with the previous quarter.” However, challenges such as global economic uncertainty and commodity price instability continue to be significant factors influencing Malaysia’s economic outlook.
The Department of Statistics Malaysia (DOSM
