KUALA LUMPUR: Standard Chartered (StanChart) has maintained its forecast for Malaysia’s gross domestic product (GDP) growth at 4.8% for 2024, while acknowledging upside risks.
“We see consumer spending moderating as labour-market conditions soften but expect it to remain the primary driver. Investment should continue to benefit from ongoing infrastructure projects, strong foreign direct investment (FDI) interest and lower global interest rates,” StanChart economist Jonathan Koh and chief economist Edward Lee said in a report.
The research house said the external sector is expected to benefit from a rebound in the global electronics cycle and the easing of global monetary policies.
Additionally, while tourism recovery may continue, the boost to growth is likely to fade as it approaches pre-covid levels.
Bank Negara announced on Friday that the Malaysian economy grew by 5.9% in the second quarter of 2024 (2Q24), driven by stronger domestic demand and continued export expansion.
The figure is slightly above the Statistics Department’s advanced estimate of 5.8% released earlier.
The central bank said headline inflation is projected to average between 2% and 3.5% this year.
StanChart also maintained that Bank Negara will keep the overnight policy rate (OPR) at 3% in 2024, as both headline and core inflation are well within Bank Negara’s forecast.
“A key factor to monitor is any second-round effects from potential RON95 fuel subsidy rationalisation – this has yet to be announced by the government. On balance, we think the risk in terms of Bank Negara’s next move is tilted more towards a hike than a cut,” it said.
Bank Negara said the headline and core inflation averaged 1.8% in the first half of 2024 (1H24). During the quarter, both headline and core inflation edged higher to 1.9% (1Q24: 1.7% and 1.8% respectively).
As for the ringgit, StanChart maintained its view that the local currency will remain the region's outperformer in 2024.
“Year-to-date, the ringgit is the only Asian currency that has appreciated substantially against the US dollar. Authorities' engagement with stakeholders to encourage repatriation, conversion and hedging of foreign currency has been the key trigger. Underlying fundamentals have also been ringgit positive,” it said.
As at Aug 13, the ringgit has appreciated by 3.1% against the US dollar year-to-date. On Friday, the local unit strengthened to 4.4295/4350 against the greenback, up from Thursday’s close of 4.4350/4405.
