‘M’sia’s GDP to accelerate to 4.6 per cent in 2024’
Malaysia’s gross domestic product (GDP) growth is expected to continue to accelerate to 4.6 per cent this year, driven by improvement in external demand, the research team at RHB Investment Bank Bhd (RHB Investment) observes.
Following the release of the Department of Statistics Malaysia’s (DOSM) fourth quarter of 2023 (4Q23) forecast, whereby Malaysia’s GDP is estimated to grow by 3.4 per cent in 4Q and subsequently 3.8 per cent for 2023, the research team remarked that the slower-thanexpected GGP growth could be attributable to weaker net exports on y-o-y basis, coupled with a stronger rebound in imports at 1.4 per cent y-o-y.
Nevertheless, it said: “The nominal export growth is projected to rebound by 4.3 per cent y-o-y in 2024 versus a decline of 8.0 per cent in 2023, spurred by resilient global and regional economic growth prospects coupled with re-acceleration in the global technology cycle.”
On the domestic end, it said it remained positive on the private consumption growth in Malaysia amid healthy labour market demand conditions.
“As per November’s print, the unemployment rate has returned to a pre-pandemic level of 3.3 per cent, while the job creation remains healthy.
“We recognise that there would be some dampening effect on consumer spending amid lower disposable income, in line with the retargeting of subsidies and social assistance allocation and the upward revision in services tax.
“Nevertheless, the impact would be contained by the continued provision of social assistance towards the lower income group and differing impacts across income groups where the higher income group has relatively inelastic demand.
“At an aggregate level, the T40 contributes most to the aggregate consumer expenditure with a share of 42.3 per cent, followed by M40 at 39.9 per cent and the B20 group at 17.8 per cent,” it explained.
On the supply side, it expected a turnaround in the manufacturing sector, underpinned by anticipated improvement in the external environment coupled with robust domestic economic activities.
“The recent uptick in capital and intermediate goods imports indicates an improvement in investment appetite and the possibility of expansion in manufacturing activities for the upcoming months.
“In the services sector, the retail trade, accommodation and restaurants as well as communication segments are expected to increase in line with continued expansion of consumer spending and improved tourism activities from regional peers,” it said.
On its forecast of Malaysia’s 2023 GDP, it revise its 2023 GDP growth projection to 3.8 per cent y-o-y (versus its former projection of 4.1 per cent y-o-y), to reflect the weaker-thanexpected 4Q23 GDP growth on y-o-y basis.
“Our 4Q23 GDP growth forecast is revised to 3.4 per cent y-o-y versus our previous estimation of 4.6 per cent y-o-y.
“We expect the 4QGDP growth to be sustained at a similar rate of 3.4 per cent y-o-y in the final release (scheduled on February 16), as the year-end seasonality effect would also drag on the December data,” it said.