KUALA LUMPUR: Malaysia's services sector is poised to remain stable in the second half of 2024 (2H24), driven by household spending coupled with tourism and travel-related activities.
According to the Economic Outlook 2025, the services sector grew 5.4 per cent in 1H24.
The report said the wholesale and retail trade sub-sector grew by 4.3 per cent in 1H24, with sustained performance, mainly in retail trade and motor vehicle segments driven by improved consumer spending.
"The motor vehicles segment is also anticipated to remain strong following high demand for new vehicles, notably hybrid and electric vehicles (EVs) exhibiting rapid sales growth, whereas orders for small and compact cars remain high.
"This has led the industry to revise the target for sales of new vehicles from 740,000 to 765,000 units in 2024. Subsequently, the subsector is projected to grow by 4.1 per cent in 2024," it added.
The transportation and storage subsector registered a double digit growth of 10.7 per cent in 1H24, led by land and air transport segments.
This commendable performance was boosted by an expansion of 15.3 per cent to 46.6 million in air passenger traffic and 6.5 per cent to one billion vehicles in toll highways.
The report said the stellar performance is projected to continue into 2H24 at 10.4 per cent.
The water transport segment is anticipated to grow, supported by steady trade performance, particularly export of manufactured and agriculture goods.
Overall, the subsector is estimated to expand by 10.6 per cent in 2024.
In the second half of the year, the finance and insurance subsector is poised to expand by 6.1 per cent in line with expansion in both segments.
"The banking segment is anticipated to record a steady growth following continuous demand for credit facilities, while the insurance segment is expected to gain from higher premium earnings. Overall, the subsector is estimated to rebound by 5.7 per cent in 2024," the report added.
Meanwhile, the information and communication subsector is expected to grow by 3.2 per cent in 2H24 supported by the uptick in digital-based services, social commerce activities' as well as streaming of entertainment contents and major sporting events.
"Likewise, the adoption of digital services, particularly artificial intelligence (AI), cloud computing and cybersecurity programming is anticipated to spur the subsector's growth.
"Moreover, mobile internet packages for civil servants, students and media practitioners are expected to further increase the internet subscription rate. Hence, the subsector is anticipated to record a growth of 3.1 per cent in 2024," it added.