GDP expected to register 4.7% growth in 2024

PETALING JAYA: MIDF Research expects Malaysia’s gross domestic product (GDP) to grow by 4.7% in 2024 helped by a recovery in external trade, especially demand for electrical and electronic products from markets like China and the United States and restocking activities.

The growth projection for the GDP will continue to be anchored by a sustained rise in domestic spending, helped by a healthy labour market, rising income and continued recovery in inbound tourist numbers, the research house stated in a report.

“We remain cautious that external developments like slower growth in China, possible recession risk in the US and disruption to global trade from intensified geopolitical tensions could be the downside risks to Malaysia’s growth prospects in 2024.

“On the domestic front, we opine that the possible upward price pressures may result in constraining consumers’ purchasing power and their spending,” it warned.

The country’s fourth-quarter (4Q23) GDP grew at a slower pace of 3% which was below the 3.4% forecast by economists, taking the full-year growth rate to 3.7% in 2023.

The weakness in the 4Q23 growth was primarily due to steeper contraction in external demand. Net exports plunged 35.6% year-on-year in 4Q23, dragged down by a relatively sharper fall in exports and resulted in the larger full-year contraction in trade surplus.

On the plus side for growth, MIDF Research foresees investment to remain on an expansionary trend in 2024 backed by progress in various infrastructure projects on the back of still encouraging domestic economic conditions.

It added that in anticipation of recovering external demand, companies might also increase spending on capital and rebuilding of inventories.

The research firm said it remains cautious that consumption spending may be constrained by concerns over inflationary pressures, as the government has voiced its plan to revise its bloated subsidies this year.

Meanwhile, Bernama reported OCBC Global Markets Research projected Malaysia’s GDP would register a 4.2% growth this year on the back of a cautiously optimistic outlook.

“We expect more visible support to GDP growth from private sector consumption and investment spending. The recent pickup in capital goods imports in November and December 2023 is encouraging in this regard.

“Additionally, we expect a bottoming out of the electronics export downcycle, likely in the second half of 2024, which will help mitigate downside risks to export growth.”