KUALA LUMPUR, Oct 8 — The World Bank today revised Malaysia’s 2024 growth forecast to 4.9 per cent as the country showed stronger-than-expected household consumption and improved investment and trade performance in the first half of this year.

The Bank said domestic demand and export data in the second half of 2024 have stayed positive, and private consumption is projected to expand to 5.5 per cent in 2024 from 4.7 in 2023, supported by further improvement in labour market conditions and wage growth.

The revision also factored in continued government household income support. October’s revision is 0.6 percentage point higher than April’s 4.3 per cent projections.

"Malaysia is in a good place. In emerging markets in general, (there are) positive trends in consumer confidence, manufacturing and services,” Apurva Sanghi, the Bank’s Malaysia lead economist, said during a media briefing of the October 2024 Malaysia Economic Monitor here.

The Bank also said Malaysia’s GDP per capita is now approximately 12 per cent above the pre-Covid level, outperforming many Asean peers.

ey labour market indicators in Malaysia have improved, with the national unemployment rate remaining steady at 3.3 per cent in the second quarter of 2024 to back to pre-pandemic levels.

But the Bank said skill-related underemployment (SRU) remains a major problem, as the private sector continues to offer inadequate high-skilled jobs.

In 2023, only some 48,000 high-skilled jobs were offered compared to the number of graduates. Malaysian universities and colleges produced 287,000 graduates last year.

"Addressing the challenges driving SRU requires strategies such as aligning education with industry demands, enhancing Malaysia’s competitiveness, and supporting lifelong skill development,” the Bank said.

Meanwhile the Malaysian ringgit has appreciated 5.3 per cent year-to-date against the US dollar, rebounding from its depreciation in 2023 to make it one of the strongest-performing currencies in the east Asia-Pacific region, the Bank said.

Malaysia also saw higher net foreign direct investment (FDI) inflow in the second quarter of 2024 compared to last year, primarily directed into the services sector. This could improve with efforts to minimize operational restrictions and develop Special Economic Zones.

Still, weaker-than-expected activity in advanced economies, escalating geopolitical tensions, and potential underperformance of China’s growth could pose risks to Malaysia’s growth outlook.

"On the domestic front, slower growth in real disposable income and the lingering effects of post-pandemic monetary policy normalization may pose downside risks to private consumption,” the Bank said.