KUALA LUMPUR: The small and medium enterprise (SME) sentiment index in Malaysia has improved, rising to 54.7 in the first half of 2024 from 53.5 in the second half of 2023.

SME Development Bank Malaysia Bhd (SME Bank) group president/chief executive officer Dr Aria Putera Ismail said the positive shift was primarily driven by better economic expectations, improved cash flow, and stronger liquidity buffers among micro, small and medium enterprises (MSMEs).

"These results reflect the optimism, resilience and adaptability of our MSMEs as they navigate Malaysia's steady economic recovery," he said in a statement.

Aria Putera said the upward trend "resonates strongly with the government's effort under the MADANI Economy framework, which aimed to rejuvenate the Malaysian economy by fostering inclusive and sustainable growth."

"The improved sentiment among MSMEs underscores their critical role in this economic revival, highlighting their ability to adapt and thrive in a dynamic business environment.

"As we continue to support MSMEs, their positive outlook will be pivotal in driving Malaysia towards a more robust and resilient future," he added.

SME Bank chief economist Lynette Lee Li Qing said the sentiment is consistent with Malaysia's gross domestic product growth forecast of 4-5 per cent for 2024, an increase from 3.6 per cent in 2023.

"Malaysia's economy continued to expand by 4.2 per cent year-on-year in the first quarter of 2024, surpassing the 2.9 per cent growth recorded in the previous quarter.

"Other forward-looking indicators, such as the Malaysian Institute of Economic Research consumer sentiment index and business tendency statistics from the Department of Statistics Malaysia, also indicate sustained economic expansion," she said, adding that  "nonetheless, challenges persist regarding profitability, employment decisions and expansion initiatives amidst a high-cost environment."

The index survey, conducted during the first half of 2024, collected insights from 1,295 participants across all states in Malaysia, representing a wide range of sectors and business sizes, said SME Bank.

https://www.nst.com.my/business/corporate/2024/07/1071730/msmes-now-more-bullish-prospects-sme-bank