RHB IB expects 4.2% y-o-y for 1Q GDP print

KUALA LUMPUR: RHB Investment Bank Bhd is expecting an upside bias towards 4.2 per cent year-on-year (yoy) for first quarter 2024 (1Q 2024) gross domestic product (GDP) print, which is scheduled to be released on May 17, 2024.

The projection is higher than the Statistics Department Malaysia’s (DOSM) 3.9 per cent estimate.

"Our composite leading indicator, RHB-LEI (MY), suggests that Malaysia’s economic growth remains underpinned by export-oriented sectors such as electronics and electricals (E&E), energy and metal goods,” it said in a note today.

The research house maintains Malaysia’s 2024 GDP forecast at 4.6 per cent as the slower-than-expected 1Q growth estimate is "unlikely to derail” its optimistic 2024 economic outlook, given that the exports and industrial production momentum have begun to gather steam, the potential upsides in March’s key macroeconomic data and seasonality impact of February data amid shorter working days.

"We continue to see domestic confidence improving with better Purchasing Managers' Index (PMI), robust imports of capital and intermediate goods, and an uptick in business and consumer confidence,” it said.

Meanwhile, MIDF Research said the Malaysian economy is estimated to grow 3.9 per cent yoy in 1Q 2024 (4Q 2023: 3.0 per cent yoy), the fastest expansion in four quarters.

"Growth was relatively better than expected although it came in below 4.1 per cent yoy as projected by market consensus,” it said.

With the improving growth momentum and expected recovery in external demand, MIDF Research has maintained its forecast that Malaysia’s GDP will accelerate to 4.7 per cent this year (2023: 3.7 per cent).

"In addition to the sustained growth in domestic demand, we foresee stronger GDP growth underpinned by improving global manufacturing activities and growing demand from China and the United States. Moreover, recovery in the E&E trade will also support external trade recovery this year,” it said.

Nonetheless, MIDF Research is cautious about external developments which could constrain external trade recovery.

"This includes downside risks such as slower growth in China, further escalation in geopolitical tensions in the Middle East and risk of weak final demand from the advanced markets due to high borrowing costs,” it added.

CIMB Treasury & Markets Research expects the recovery in E&E exports, higher tourist arrivals, domestic demand resilience underpinned by stronger investment growth, as well as the onset of low base effect, to lift Malaysia’s growth further in the coming quarters.

"We retain our 2024 forecasts at 4.9 per cent for GDP growth and 3.00 per cent for overnight policy rate,” it said. - Reuters

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