Malaysia’s 2Q2024 GDP Preview

We foresee a slightly higher than the advanced estimate for 2Q2024 GDP at 6.0% y/y. Our initial estimates indicated that Malaysia’s economy could grow by 5.3% year-on-year in 2Q2024. However, after considering the latest statistical data, such as the Volume Index of Services, external trade, and Industrial Production Index (IPI), our model suggests that the growth in 2Q2024 could be as high as 6.0% year-on-year.

If this holds true, it will mark Malaysia’s best performance since 4Q2017, and the third fastest-growing economy in ASEAN in 2Q2024 after Vietnam and the Philippines. We believe that such strong growth was supported by robust private consumption, a key growth driver of the economy. This was attributed to solid labour market conditions, stable inflation, the festive seasons, and EPF Flexible (Account 3) withdrawals.

In addition to the low base effect from last year, the Global Semiconductor Sales (GSS) upcycle, which recorded an encouraging growth of 16.4% in the first five months after a contraction of 10.5% in the same period last year, was beneficial for our exports. Specifically, the E&E sector finally rebounded to 2.1% in 2Q2024 (1Q2024: -5.8%) after experiencing four consecutive quarters of contraction.

The services sector remained robust owing to higher distributive trade and gradual improvement in the tourism sector. For the record, Malaysia recorded a significant increase in foreign tourist arrivals, with a total of about 9.5 million for the first five months of 2024, translating into a 27% increase y/y compared to the same period last year. We believe that the current OPR level continues to support the economy, which will help to lift the growth during the quarter. We think vehicle sales in 2Q2024 were commendable amid a stable interest rate environment.

We are pencilling in FY2024 to come in at the upper range of official estimates, between 4.0%-5.0%. Our in-house projection should correspond with the latest data accordingly should our projection materialise. We will relook at our projection after releasing official 2Q2024 data, which will be announced on 16 August 2024.

Source: AmInvest Research - 15 Aug 2024