KUALA LUMPUR, May 17 — MIDF Research has maintained its 2024 gross domestic product (GDP) growth forecast at 4.7 per cent, as positive growth momentum is expected to continue in the coming quarters.
The research firm said domestic spending activities will continue to grow on the back of positive labour market conditions, income growth and increased tourist arrivals.
Additionally, external demand will recover as Malaysia stands to benefit from improvements in global production and international trade, especially growing demand from major trading partners such as China and the United States.
“We also expect the improvement in the electric and electronic trade to contribute to the export recovery this year,” it said in a note.
Nevertheless, MIDF Research remains cautious that several risks could constrain this year’s growth outlook, such as escalation in geopolitical and trade tensions; weaker growth in China and the US; and a significant slowdown in final demand from major markets (given the high borrowing costs).
“Policy changes may result in higher inflation, which could adversely affect consumer sentiment and their spending plans on the domestic front,” it said.
On the demand side, MIDF Research said private consumption growth remains resilient and advancing faster by 4.7 per cent year-on-year (y-o-y) (4Q 20233: 4.2 per cent y-o-y).
The low jobless rate of 3.3 per cent and the low inflation, which averaged 1.7 per cent y-o-y during the quarter, supported the continued rise in private consumption.
Meanwhile, investment spending continued to grow with investment by the private and public sectors expanding by 9.2 per cent y-o-y and 11.5 per cent y-o-y, respectively.
The stronger public sector investment was in line with the progress in the construction sector, particularly the ongoing infrastructure developments under the 12th Malaysia Plan.
“This encouraging trend may continue in the coming period given the expansionary fiscal policy in which the government indicated a continued commitment to keep a large RM90 billion allocation a year for development spending until 2025.
“With more jobs being added and more people entering the job market, we foresee this will continue to support consumer spending,” it said.
MIDF Research also anticipates that continued recovery in exports will eventually result in net exports contributing positively to growth this year.
Real exports rebounded to expand 5.2 per cent y-o-y, ending four quarters of contraction.
The rebound was underpinned by improved exports of goods, which advanced 1.0 per cent y-o-y, in addition to the strong surge in services exports (1Q 2024: 33.8 per cent y-o-y).
According to Bank Negara Malaysia, the Malaysian economy expanded at a higher rate of 4.2 per cent in the first quarter of 2024 (1Q 2024) from 2.9 per cent in 4Q 2023, driven by stronger private expenditure and a positive turnaround in exports. — Bernama
