KUALA LUMPUR, Aug 21 — Moody’s Analytics reckons that the 4 per cent growth forecast for Malaysia in 2023 is reasonable for countries in the region although this will be at the lower end of Bank Negara Malaysia’s estimated range.
The central bank expects Malaysia to record slower growth, closer to the lower end of its growth forecast range of 4 to 5 per cent.
In its weekly highlight today, the analyst group said a resilient labour market and a pick-up in tourism arrivals will boost spending.
It believes the strength in the domestic market would be able to partially offset the slowing global growth which is set to weigh on export demand.
Moody’s Analytics said the second quarter (2Q) gross domestic product (GDP) growth of 2.9 per cent matches its expectations.
While both exports and imports fell more than nine per cent, tourist arrivals buffered some decline in trade.
Meanwhile, Public Investment Bank Bhd retained its full-year 2023 GDP growth projection of 4.3 per cent.
“However, despite the expectation of support from the recovery in tourism, considering the 4.2 per cent growth in the first half year (1H), the looming high base effect impacting 3Q and 4Q GDP, coupled with the reverberations of a slower global economic climate on external trade, we acknowledge the potential for a downward revision to our forecast,” it said in a note.
Moreover, prevailing substantial downside perils stem from the global landscape, encompassing heightened volatility in advanced economies’ economic trajectories, a further slowing of economic activity in China, the escalation of geopolitical tensions, unexpected inflationary outcomes, and the spectre of rigorous financial market tightening — possibly compounded by the heightened banking sector strain — could exert supplementary pressures on external demand.
Domestically, recent months have seen pivotal indicators, including the Industrial Production Index, crude palm oil output and the Distributive Trade Index. display signs of further moderation.
Kenanga Investment Bank Bhd said the economy is expected to return to moderate expansion in 2H amid resilience of domestic demand as the labour market remains robust.
Looking forward to 2024, it expects a more robust GDP growth trajectory of 4.9 per cent fuelled by a more sustained global economic recovery next year, particularly in China, which is expected to drive stronger external demand.
“The government’s commitment to pro-growth initiatives is likely to persist, and the increased political stability following state elections could enhance confidence among foreign investors, potentially leading to a greater inflow of capital and portfolio investments.
“While the global growth outlook might be more resilient, as major central banks may lean towards rate cuts, lingering downside risks persist. These stem from ongoing geopolitical issues, such as the Russia-Ukraine conflict as well as the tense relationship between the US, China, and Taiwan,” it noted.
— Bernama
