Malaysia and Philippines forecast GDP growth amid challenges and opportunities

Amidst a challenging global economic environment, Malaysia and the Philippines have projected their respective gross domestic product (GDP) growth rates, with Malaysia anticipating a slowdown while the Philippines adjusts its expectations upward.

Today, Bank Islam Malaysia Bhd announced its projection for Malaysia’s third-quarter GDP growth at 3.2% for the fiscal year 2023, attributing the increase to strong domestic demand and a slight rise in labor productivity of 0.6%. The labor force participation rate remained stable at 70.1%. Notably, distributive trade sales saw an increase from 5.7% in the second quarter to 6.8% in the third quarter. However, wage moderation in manufacturing and services sectors could potentially dampen consumer spending.

The bank also pointed out that global demand weakness and a significant 15.2% decrease in exports might hinder further growth. Trade relations with major partners like the US, EU, and China have been impacted by geopolitical tensions, high global interest rates, and property sector issues in China. For the fourth quarter of FY2023, GDP growth is expected to be around the mid-two percent range due to continued high interest rates from major central banks and shrinking global demand. Despite these challenges, the bank maintained its full-year GDP forecast at 3.7%, which represents a slowdown from the 8.7% expansion seen in 2022.

In contrast, the Philippines has revised its full-year real GDP growth forecast for 2023 to 5.7%, which aligns with the official estimate range of 6.0%-7.0%. This optimistic revision is influenced by strong year-end festive demand and is further supported by the approval of a larger national budget for 2024 on September 27, easing inflationary pressures, and an anticipated upturn in the global technology cycle.

The Philippine economy experienced a robust growth rate of 5.9% year-over-year in the third quarter of 2023, outperforming both initial estimates of 4.5% and Bloomberg consensus of 4.7%. This surge was largely fueled by increased government spending, investments, and a sustained positive net trade contribution—although tempered by softer household consumption and stock withdrawals. All major economic sectors contributed to this growth, with services taking the lead, followed by construction, utilities, and manufacturing sectors.

Both countries’ projections come with inherent risks and uncertainties as they navigate through external pressures and internal economic dynamics. The information shared today reflects their current economic conditions and expectations for future performance based on available data and trends.

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