KUALA LUMPUR (April 8): Malaysia’s gross domestic product (GDP) is expected to grow by 5% in 2024, exceeding Asean’s projected 4.8%, according to the Asean+3 Macroeconomic Research Office (Amro).

Amro chief economist Khor Hoe Ee said economic growth in the regional bloc is expected to improve, premised on higher exports on the back of the semiconductor upcycle, continued strength in the US’ goods consumption and robust demand for travel and modern services.

Among the 10-member regional bloc, Amro expects Malaysia’s growth to be eclipsed only by the Philippines (6.3%), Cambodia (6.2%), Vietnam (6%) and Indonesia (5.2%).

Amro’s 5% year-on-year (y-o-y) growth forecast for the Malaysian economy falls at the top end of Bank Negara Malaysia’s projected range of 4% to 5%. The research firm expects Malaysia’s economic growth to moderate to 4.7% in 2025.

Khor said that Malaysia’s headline inflation is expected to remain steady at 2.5% y-o-y in 2024 before rising to 3% in 2025. He noted that a risk to this forecast is the Malaysian government’s planned shift to a targeted subsidy mechanism.

Meanwhile, Amro forecasts Asean’s headline inflation to moderate to 5.2% in 2024, from 8% in 2023, and then further to 4.4% in 2025.

In terms of risks to economic growth in the region, Khor said these include a spike in global commodity prices due to geopolitical tension or weather shocks, weaker economic growth in China, and adverse spillovers from the US presidential election due to potentially heightened market uncertainties.

Khor also noted the possibility, albeit a low likelihood, of a sharp growth slowdown in the US and Europe.

“The risk of a sharp slowdown in the US and Europe, especially in the US, is now much lower. Although, if it does materialise, the impact will be quite high,” he added.

Semiconductor upcycle expected to peak in end-2024

On the uptrend in exports that is expected to be a boon for the region, Khor said this will be supported by the turnaround in semiconductor sales since it bottomed out last year.

Amro believes that the upcycle will peak towards the end of this year, he said, noting that countries with exposure to semiconductor activities, like Malaysia, are expected to be major beneficiaries.