KUALA LUMPUR, April 5 — AmBank Group Bhd has maintained its forecast for Malaysia’s real gross domestic product (GDP) growth this year at 4.5 per cent, which falls at the mid-point of Bank Negara Malaysia’s (BNM) projection, on the back of higher private consumption and net exports.

BNM expects the Malaysian economy to grow between four per cent and five per cent in 2024 from 3.7 per cent in 2023.

In a research note, AmBank believes that statistical rebound plays a role, with private consumption and net exports expected to come in higher in 2024.

It noted BNM’s take that private consumption is underpinned by improving income and other policy support such as the possible revision of the minimum wage, civil service pay review, higher cash assistance, and other special incentives.

"However, we are taking a different stance about the impact of the tourism sector on the economy, mostly due to inconsistent measurements for the industry,” it said.

"Tourism receipts make more sense than tourist arrivals as about half of Malaysia’s tourism arrivals data is from Singapore alone, suggesting an increasing number of Johor-Singapore labour migrants over the years and distorting the usefulness of tourist arrivals data,” it added.

The bank said private consumption is expected to grow by one percentage point, from 4.7 per cent to 5.7 per cent, amid a higher expected nominal Compensation of Employees and the services sector.

"On the other hand, investments will benefit from the continued improvements in multi-year projects such as the East Coast Rail Link (ECRL) and the Sabah portion of the Pan-Borneo Highway.”

The central bank also believes technology upcycle and higher inbound tourism will complement this year’s growth, it said.

On another note, Ambank has projected inflation to stand between 2.5 per cent to 3.5 per cent, a tad higher than BNM’s projection, depending on the magnitude of change in the RON95 fuel price.

BNM projects headline inflation to average between a wide range of 2.0 per cent to 3.5 per cent in 2024, with core inflation to average slightly lower between 2.0 per cent to 3.0 per cent.

"For now, we expect inflation to rise by 0.3 per cent above baseline should RON95 be priced higher by 10 sen. We are also cautious about the impact of the prolonged unfavourable US dollar-ringgit exchange rate, especially on our imports of food products,” it said.

Meanwhile, Ambank believes that BNM will keep the overnight policy rate (OPR) steady at 3.0 per cent throughout 2024.

"While this is increasingly becoming an industry viewpoint, we cannot discount the possibility of a rate hike should inflation and growth come in higher than expected,” it added. — Bernama