KUALA LUMPUR, Nov 17 — RHB Investment Bank Bhd has maintained its 2023 gross domestic product (GDP) growth projection at 4.3 per cent year-on-year (y-o-y), with rosier economic prospects expected in the fourth quarter of 2023 (4Q 2023).
It also projected that Malaysia’s growth will increase by 4.6 per cent y-o-y in 2024, underpinned by the external sector, including manufacturing and exports.
Domestic demand is expected to be driven by continued resilience in investment spending, spurred by the continuation of large-scale transport-related projects and business-friendly policies.
“Consumer spending momentum is anticipated to rise amid robust labour market conditions, while consumer sentiment is expected to improve.
“Higher necessities and discretionary spending by households are also observed in the 3Q 2023 data,” RHB Investment said in its Global Economics and Market Strategy note today.
On the external front, it said the early recovery of trade performance in 4Q 2023 would positively impact manufacturing sector activities.
Solid recovery is expected by the first half (1H) of 2024 as downside risks dissipate; the global technology cycle downturn may be ending, and there are early signs of recovery in China’s economy.
Further out, the external demand would be bolstered by continued resilience in the US economy and improved economic momentum in the Asean region by 1Q24.
On the downside risks, RHB Investment recognised there may be some dampening effect on consumer spending due to subsidy rationalisation and the upward revision in services tax.
It expects a broad-based recovery across the sectors on the supply side, with a solid recovery expected in the manufacturing sector by 1H 2024.
“We expect the overnight policy rate (OPR) to be maintained at 3.00 per cent until end-2024 amid resilient growth prospects and uncertainties in the inflationary trajectory. No OPR cuts or hikes are expected at this juncture,” RHB Investment said.
Meanwhile, another research firm, MIDF Research, maintained its 2023 GDP growth forecast at 4.2 per cent for 2023, underpinned by a recovery in external trade from the 4Q 2023 onwards.
“We expect Malaysia’s economic growth to pick up next year as we assume the trade recovery will continue, driven by a pick-up in demand for electrical and electronic (E&E) products and semiconductors,” it said.
In addition, employment and income growth, including government cash assistance, will support domestic spending growth to continue until next year, MIDF Research said, adding that changes in government policies are the key downside risks to household spending.
— Bernama
