KUALA LUMPUR (July 18): AmBank Group has projected Malaysia's gross domestic product (GDP) estimates for the second quarter of 2024 (2Q 2024) to register a growth of 5.3% year-on-year (y-o-y) amid sustained domestic demand and better exports.

In a note Thursday, the bank said its latest forecast is based on the gradual improvements in the external sector, better distributive trade sales growth, robust labour market, and sustained and low inflation in the quarter.

"Base effects also matter, given that Malaysia’s growth in the same quarter in the preceding year was weighed down by the semiconductor downcycle, which was no longer the case in the previous quarter,” the note said.

It also said that there is an upside to its subsequent 2Q 2024 GDP growth forecast, subject to incoming data. The Statistics Department Malaysia (DOSM) is scheduled to release Malaysia’s advance 2Q 2024 GDP estimates on Friday.

AmBank noted that there is a rising possibility of an upgrade on the financial year (FY) 2024 GDP growth should its 2Q 2024 GDP forecast materialise.

"Should 2Q 2024 come in at 5.3% y-o-y or higher, our in-house Malaysia’s FY 2024 GDP should correspond accordingly," it noted, adding that its current FY 2024 GDP growth forecast stands at 4.5% y-o-y.

The bank also expects private consumption to remain well supported amid more favourable labour market prospects.

"However, our projections face downside risks from higher retail energy prices amid subsidy rationalisation,” it said.

Nevertheless, it also believes that Malaysia's inflation has stabilised, with non-food and food and beverage inflation aligning with headline inflation.

"We noticed that non-food inflation has begun to outstrip that of food and beverages, contributing to the possibility of higher headline inflation in the coming months due to the (non-food) accounting for 70.2% of the total consumer price index (CPI) basket," it said.

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