Malaysia’s GDP growth outlook is positive

KUALA LUMPUR – Economists maintained their positive outlook on Malaysia’s gross domestic product (GDP) growth on Monday, after the country’s GDP exceeded expectations at 4.2 percent.

Maybank Investment Bank said in a note that given the first quarter growth performance, it raised Malaysia’s 2024 and 2025 real GDP growth forecasts to 4.7 percent (from 4.4 percent) and 5.1 percent (from 5 percent).

According to the research house, key revisions are in the projections for gross fixed capital formation on stronger private investment and public investments that feed into upgrades in growth forecasts for construction and imports of goods and services.

These revisions reflect growing momentum in the realization of robust approved private sector investment over the past three years, which led to higher construction activities in the non-residential buildings/structures and increase in capital expenditure for machinery and equipment, thus imports of capital goods.

Kenanga Research, on the other hand, maintained Malaysia’s 2024 GDP growth forecast at 4.5 percent to 5 percent, driven by solid domestic demand and sustained expansion in manufacturing and services sectors.

According to the research house, this outlook is supported by strong growth in the services sector, driven by resilient domestic demand.

Furthermore, an increase in tourist arrivals and a healthy labor market would significantly support the growth trajectory.

It also foresees a significant recovery in the export-oriented industries later this year, particularly with a potential upturn in the technology cycle, especially in the second half.

Nevertheless, it said geopolitical risk would dominate the macro narrative and potentially disrupt the growth momentum.

Hong Leong Investment Bank Research also continued to expect Malaysia’s GDP to normalize upwards to 4.8 percent year on year in 2024.

According to the research house, the growth is expected to be spearheaded by supportive private consumption, benefiting from continued employment and wage growth, as well as higher investment activity, reflected by the healthy investment intentions.

The recovery in trade activity is also expected to lift GDP growth, aided by low base effect, recovery in the global tech sector, and improving commodity prices.

Nevertheless, it said an escalation of geopolitical tensions and persistent inflationary pressures continue to pose downside risks.