KUALA LUMPUR (May 16): Malaysia’s economic growth is expected to expand at faster pace in the first quarter (1Q) of 2024, supported by gradual rebound in domestic consumption.
Gross domestic product (GDP) may rise 3.9% for the January-March period compared to the same period in 2023, according to the median estimate of 15 economists surveyed by Bloomberg. In the fourth quarter, GDP rose 3% year-on-year, undershooting forecasts.
The survey also calls for a median 1.9% growth on a seasonally adjusted quarter-on-quarter basis versus 2.1% sequential contraction in the final three months of 2023. Malaysia will release GDP data on Friday.
Latest supply-side indicators — from services to manufacturing — point to an uptick in performance, said Bank Muamalat Malaysia Bhd chief economist Dr Hj Mohd Afzanizam Abdul Rashid.
On the demand side, Farid Burhanuddin, an economist at TA Securities, observed that substantial decrease in the trade surplus suggests “potential risk to economic growth” though its impact may be mitigated by its “relatively minor contribution in percentage terms”.
Official flash estimates point to the economy expanding 3.9% in 1Q from a year earlier. This year, the government forecasts the economy to pick up pace to 4-5% from 3.7% last year on the back of exports recovery and higher tourist arrivals to bolster consumer spending and business investments.
Going ahead however, planned rationalisation of fuel subsidies might weaken consumer and business confidence, Lee Heng Guie, executive director of the Socio-Economic Research Centre, flagged. The effect however could be softened through the cash handouts and partial pension funds withdrawals.
Delays in budget measure implementations and projects would impede domestic demand, he cautioned.
“Investment promotion agencies, along with state and local authorities, must collaborate effectively to ensure the swift execution of approved foreign and domestic investment projects,” Lee said.
On the external front, Malaysia's external trade is closely linked to China and any weakness in its biggest trading partner’s economy could translate into a slowdown, Farid of TA Securities said.
"If these downside risks materialise, they could indeed hinder overall GDP growth" Farid said. "While these external dynamics indirectly impact the domestic economy, it's crucial to bolster our internal fundamentals to mitigate its effects," he added.
Source: TheEdge - 17 May 2024
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