KUALA LUMPUR, Sept 1 ― MIDF Research has upgraded its growth target for Malaysia’s economy to 6.6 per cent from 6.0 per cent estimated earlier, following a stronger-than-expected gross domestic product (GDP) release in the second quarter of 2022 (Q2 2022).

In a note today, MIDF Research said reading from the better prospects as indicated by the Leading Index, it foresees the momentum of growth continuing into the second half of the year.

"This will be backed by increased spending and business activities as the economy transitions into the endemic phase of Covid-19 with relaxed restrictions and rising tourist arrivals.

"While measures like the Bantuan Keluarga Malaysia cash handouts and the Employees Provident Fund withdrawals helped to boost spending in Q2 CY2022, we may see a more normalised growth for domestic spending towards the latter part of the year,” it said.

MIDF Research noted that improving the labour market and better income prospects will continue to support domestic spending activity.

For external trade, the research firm expects the growing external demand, especially for electrical and electronics (E&E), petroleum and palm oil, to also support the growth outlook this year.

"However, we are cautious of possible downside risks from the external front such as weaker growth prospects in major trading partners (China and the United States), escalation of geopolitical tensions and continued disruption in the global supply chain.

"Despite these external uncertainties, we opine the above 6.0 per cent growth can be achieved given the strength and the sustained improvement in domestic demand,” it added. ― Bernama