KUALA LUMPUR (Reuters) – Malaysia’s economy grew 5.3% in the third quarter from a year earlier, slowing from an 18-month high in the previous quarter, the government and central bank said on Friday.

Economists surveyed by Reuters had forecast annual gross domestic product growth of 5.3% in the July-to-September period, down from 5.9% in the previous quarter. The poll forecast matched the government’s advance estimate released last month.

Third quarter growth was driven by strength in investment and exports, Bank Negara Malaysia (BNM) said.”Growth of the Malaysian economy will be driven by robust expansion in investment activity, continued improvement in exports, and resilient household spending” BNM Governor Abdul Rasheed Ghaffour said in a statement.

Headline and core inflation have averaged 1.8% year-to-date, and were expected to stay manageable going into 2025, BNM said.

However, the inflation outlook remained subject to the impact of government policies, global commodity prices and financial market developments.

The government plans to cut blanket subsidies for a widely used transport fuel in the middle of 2025, having done so for diesel, electricity, and chicken this year.

Last month, the government raised its 2024 economic growth forecast to a range of 4.8% to 5.3%, from 4% to 5% previously.

The central bank said the ringgit’s strength in the third quarter was partly due to the U.S. Federal Reserve’s shift to an easing cycle, and said Malaysia’s economic outlook and reforms would support the currency over the medium term.

The ringgit has recovered from a 26 year-low in February to be about 2% stronger against the dollar this year.

Earlier this month, the central bank held its key interest rate unchanged at 3.00%, reflecting its favourable outlook for growth and inflation.