PETALING JAYA: The country’s gross domestic product (GDP) is expected to grow strongly this year despite posting surprisingly lower fourth quarter and full-year growth for 2023.
Malaysia posted 3% year-on-year (y-o-y) GDP growth in the final quarter of last year, lower than consensus estimates of 3.4%, while the full year 2023 GDP came in at 3.7% y-o-y, falling short of the government’s projection of 3.8% expansion and a sharp drop from a 22-year high of 8.7% in 2022.
However, Kenanga Research anticipates the country’s 2024 GDP growth to expand to 4.5%-5% driven by a recovery in the manufacturing sector and resilient domestic demand.
“We maintain our view that GDP will grow strongly in 2024, supported by improvements in the external sector, especially the expected recovery in China and technology upcycles, which subsequently will boost the export-oriented industries,” the research house said.
It added that a rebound in the semiconductor market is expected to support the electrical and electronic products sector and overall export performance which is forecast to rebound sharply to 9.4%.
The US-based Semiconductor Industry Association (SIA) projects global semiconductor industry sales to rebound by 13.1% in 2024 following a sharp decline of 8.2% in the previous year.
“In addition, domestic demand is projected to stay strong, driven primarily by healthy labour-market conditions, with the average unemployment rate projected to decrease further to 3.2%.
This is also supported by higher investment realisation, ongoing multi-year infrastructure projects, and the implementation of various projects under the major policy framework by the government.
A continued increase in tourist arrivals and spending will further support our positive growth outlook,” Kenanga Research said.
It said Bank Negara will likely aim for a 2024 GDP growth target of 4%-5%.
The research house believes Bank Negara is expected to maintain the overnight policy rate (OPR) throughout 2024 to support the growth outlook and uphold price stability.
“The current monetary policy stance is conducive to supporting the growth outlook, especially in light of potential risks from a global economic slowdown, which could stem from restrictive monetary policy in advanced economies. Given this context, any adjustment to the OPR in the near term is unlikely,” it added.
Similarly, Hong Leong Investment Bank Research (HLIB Research) maintained its expectation for Malaysia to grow at a faster pace of 4.8% y-oy led by continued household spending, tourism recovery and realisation of investments.
The easing global interest rate environment, ebbing inflation figures and turnaround in trade activity are also expected to support growth.
