PETALING JAYA: Kenanga Research has maintained its third-quarter 2024 (3Q24) gross domestic product (GDP) growth forecast at 5.3%, with full-year growth expected to settle at 5%.
While key macro indicators suggested moderate expansion amid a slowdown in mining and domestic demand, the research houses noted that the economy remained supported by the manufacturing sector and an unexpected boost from the construction sector.
The Statistics Department is slated to release the official 3Q24 GDP data this Friday, with growth anticipated to be 5.3%.
This follows a 5.9% GDP growth in 2Q24, up from 4.2% in 1Q24, underpinned by stronger private consumption and further recovery in exports, amid a global tech upcycle.
Kenanga Research expected the manufacturing sector to continue expanding, marking four consecutive quarters of growth.
The manufacturing output index is expected to accelerate to 5.8% in 3Q24 (2Q24: 4.9%), backed by strong performance in export-oriented industries, particularly the electrical and electronics subsector, it added.
“Based on high-frequency indicators, we estimate 3Q24 GDP growth to moderate to 5.3%, but aligning with the pre-Covid 19 pandemic neutral rate (2010-2019).
“Going forward, growth is projected to ease to 4.6% in the final quarter, bringing the overall 2024 growth to 5%, within the Finance Ministry’s (MoF) 4.8% to 5.3% forecast range,” the brokerage said.
Kenanga Research noted that the outlook remains vulnerable to external risks, including potential slowdowns in advanced economies due to the lag effects of higher interest rates, rising geopolitical tensions impacting global supply chain and a potentially disappointing growth recovery in China despite ongoing stimulus measures.
“Notably, the US economy grew 2.8% in 3Q24, slightly lower than 3% in the previous quarter, while China’s growth slowed to 4.6% (2Q24: 4.7%).
“Against this backdrop, we project next year’s growth to moderate to 4.8%,” it said.
Meanwhile, Hong Leong Investment Bank (HLIB) Research has maintained its 3Q24 GDP forecast, with growth likely to moderate to 5.3% year-on-year (y-o-y).
It said growth is expected to be supported by continued expansion across most sectors, primarily the manufacturing and services sectors.
Pending the release of the full 3Q24 GDP print, HLIB Research has kept its 2024 GDP forecast unchanged at 5% y-o-y.
