KUALA LUMPUR (Feb 13): Malaysia’s economic growth in the final quarter of 2024 could potentially exceed expectations, following a strong performance in retail and wholesale trade data.

Gross domestic product (GDP) in the fourth quarter could expand faster than the consensus’ prediction and the official advance estimate of 4.8% year-on-year, economists said. The full GDP data is expected to be released on Friday.

“Growth is expected to be supported by continued expansion in the services, manufacturing and construction sectors,” said Hong Leong Investment Bank. The research house expects growth to come in at 5.0% year-on-year for the fourth quarter.

Data out on Wednesday (Feb 12) showed that Malaysia’s wholesale and retail trade picked up and grew 5.7% year-on-year in December 2024. Distributive trade is part of the services sector that accounts for more than half of the country’s economic output.

The last month of 2024 benefitted from holiday season and school breaks that typically bring a surge in festive shopping and higher family spending. An influx of foreign tourists and an increase in civil servant salaries also boosted private consumption.

Going ahead, “we anticipate sustained consumer demand” in the first three months of 2025, supported by the long school holidays, civil servants’ salary increases, the new minimum wage, and cash handouts, said BIMB Securities.

With strengthening consumer demand, spending patterns have increasingly shifted towards retail that now hold the highest ever share at 43.3% of the total distributive trade, BIMB Securities noted. Wholesale is still the largest component, at 44.3%.

There are downside risks, however, going ahead, from subsidy rationalisation that necessitate gradual implementation and government assistance measures as buffers to cushion the increase in costs of living, the house added.