KUALA LUMPUR, May 9 — RHB Investment Bank Bhd has revised upward its first quarter 2023 (1Q2023) gross domestic product (GDP) growth forecast to 5.1 per cent year-on-year (YoY) from 4.2 per cent previously on better-than-expected March Industrial Production.
“We expect that external demand and production are likely to improve by the second half of 2023 (2H2023) following the anticipated recovery in the global economy.
“Domestic demand will remain robust on the back of resilient consumer spending and well supported by labour market conditions,” the investment bank said in a note today.
The Industrial Production Index (IPI) printed 3.1 per cent YoY in March versus February’s print of 3.5 per cent YoY.
It is positive on Malaysia’s manufacturing sector outlook in 2H2023 with anticipated higher external demand following the recovery in the global economy.
It did not anticipate a worldwide recession and believed that on a quarter-on-quarter basis, the United States and most major Asian economies will bottom out by 2Q2023.
On the overnight policy rate (OPR), it expects the key rate to be at 3.25 per cent this year.
“Above trend headline (inflation) and private consumption (which accounts for a large part of) GDP growth for most of 2023, strong labour market conditions, low real interest rates and a weak currency are (factors) which are likely to keep the momentum of core CPI inflation elevated for the next few months.
“Hence, (there is a need) for Bank Negara Malaysia to tighten monetary conditions further via hiking the OPR by at least another 25 basis points,” it added.
The central bank is scheduled to announce the 1Q2023 GDP results this Friday (May 12).
— Bernama
