Ambank concurs with DOSM’s 4Q 2023 growth advance estimate of 3.4 pct

LUMPUR: Ambank Group mirrors the Department of Statistics Malaysia’s (DOSM) advance estimate of 3.4 per cent growth in the fourth quarter of 2023 (4Q 2023) due to solid and continuous expansion driven by higher labour productivity and healthier distributive trade sales.

Its chief economist, Firdaos Rosli, said Ambank’s model assumed that Malaysia’s growth was supported by lower inflation and marginal improvements in external trade in 4Q 2023.

“It is worth noting that export growth remained weak during the said quarter, while industrial production was affected by sluggish external demand among Malaysia’s major trading partners, such as China and the European Union.

“Malaysia’s quarterly exports to China have been in the negative territory over the past five quarters, the longest on record,” he said in a research note yesterday.

According to DOSM’s advance estimate, Malaysia’s 4Q 2023 gross domestic product (GDP) growth came in at 3.4 per cent year-on-year (y-o-y) based on the output or production and sectoral approach.

Firdaos said that considering that Malaysia’s 4Q 2023 came in at 3.4 per cent y-o-y, the bank also concurs with DOSM’s advance estimate that the economy grew at 3.8 per cent y-o-y in 2023, much lower than earlier forecast for the quarter at 4.1 per cent y-o-y and the full-year estimate of 4.0 per cent.

“For 1Q 2024, we forecast Malaysia’s GDP to grow at 4.3 per cent y-o-y, setting the stage for a rebound in the year.

We are sanguine about Malaysia’s growth prospects in 2024, where we expect GDP growth to come in at 4.5 per cent y-o-y,” he added.

Firdaos said Ambank posits that exports may recover in 2024 as the global tech cycle might have bottomed out.

“Market indicators suggest that the semiconductor industry reached its low point at the end of the first half of 2023 (1H 2023) and has since embarked on a path to recovery, offering positive prospects for 2024.

“Nonetheless, we remain cautious of the impending subsidy rationalisation that may lower our estimates due to higher inflation,” he said.

Meanwhile, Firdaos said Ambank’s model suggests that private consumption share to GDP may have peaked at around 60 per cent, suggesting that the government should gather pace to improve its investment climate and trade competitiveness.

“Continuous improvements in infrastructure spending and a greater push to industrialise less developed regions are key to future growth. Government spending appears to play a bigger role in pushing for higher GDP growth, where its share of GDP has been trending higher than 13 per cent since the pandemic. — Bernama