KUALA LUMPUR (July 23): HSBC Global Research has maintained its gross domestic product (GDP) growth projection of 4.5% for Malaysia, though it sees potential upside risk from the influx of foreign investment and recovery in trade in the second half of this year (2H2024).

“We have forecast for this year a GDP growth of 4.5% in Malaysia, which is slightly above the consensus, and I think there is upside risk to this, if you look at how the economy has a form of late that does look very robust, with still a lot of foreign investment coming into the country. We also expect a pickup in trade over 2H2024,” chief Asia economist Frederic Neumann said in a virtual briefing on HSBC’s Asian outlook for 2H2024 on Tuesday.

HSBC Global Research’s GDP forecast is in line with Bank Negara Malaysia's 4% to 5% growth projections this year for Malaysia’s economy - which would be higher than the 3.7% growth posted in 2023. 

Malaysia's economy is expected to have grown stronger at 5.8% year-on-year in the second quarter, driven by consumer spending and exports, marking its strongest rise in six quarters, according to the advanced estimate by the Department of Statistics Malaysia. In the first quarter, the economy grew 4.2% from a year ago.

While HSBC Global Research expects the US Federal Reserve to cut rates by once this year, HSBC head of Asia foreign exchange research Joey Chew expects the ringgit to remain stable against the greenback for the rest of the year.

“Since the ringgit has not lost much ground in recent months, it doesn't have much to rebound. This is why continued stability is expected for the ringgit versus the US dollar.

“Given that in the last couple of months, government-linked companies under the behest of the government may have already brought forward some of the foreign exchange, that is also one consideration for the stability into the rest of this year,” she explained.

The research house expects the local note to stand at 4.68 against the greenback by year end.

At the time of writing on Tuesday, the ringgit had appreciated 0.26% and traded at 4.6750 against the US dollar. The local currency has recovered 2.7% from a 26-year low of 4.8035 in February.

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