RHB IB EXPECTS MALAYSIA’S ECONOMY TO SURGE IN 2H24

KUALA LUMPUR, July 19 (Bernama) -- RHB Investment Bank Bhd (RHB IB) expects Malaysia’s economy to surge in the second half of the year (2H 2024), driven by positive external and internal drivers following the robust growth of five per cent recorded in the first five months of 2024.

The investment bank said its composite leading indicators-RHB-LEI (MY) and auto-regression model suggest that Malaysia’s final estimate of the second quarter (2Q 2024) economic print will grow above five per cent year-on-year (y-o-y) and sustain the level in 3Q.

“We expect further acceleration in trade and manufacturing activities in 2H 2024, coupled with continued resilience in domestic demand from increased consumer and investment spending,” it said in a note today.

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Hence, RHB IB is keeping Malaysia’s gross domestic product (GDP) forecast at 4.6 per cent y-o-y this year with the balance of the risks tilted to the upside, given the stronger-than-expected 2Q advance growth print of 5.8 per cent released today.

Its optimistic view is also reaffirmed by recent developments such as robust trade and industrial production data coupled with an improvement in domestic confidence as indicated by an improvement in the manufacturing Purchasing Managers’ Index as well as robust imports of capital and intermediate goods.

“Our sanguine view on the global economy remains unchanged, supported by the resilient economic performance of major economies such as the United States, China, and selected ASEAN economies.

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“Recent acceleration in China’s high-frequency data, including trade and retail sales, indicates a steady recovery of the economy,” RHB IB said.

Following this, it said Malaysia is at the forefront of benefiting from the recovery in China’s economy as key export products such as electrical and electronics, machinery and transport equipment, and other manufactured goods, command the lion’s share of trade in China’s import demand.

Domestically, RHB IB said it remains optimistic about private consumption growth amid healthy labour market demand conditions.

“The unemployment rate is expected to remain stable at a pre-pandemic level of 3.3 per cent while job creation remains healthy, as the continued expansion of consumer spending and improved tourism activities would spur the growth of services sector segments such as retail trade, accommodation and restaurants, and communication segments,” it said.

RHB IB shared that investment spending is projected to remain robust, driven by business-friendly policies and the implementation of catalytic initiatives under the national master plans.

“We have noticed stronger structure investment and continued expansion in machinery and equipment spending as per 1Q 2024 data, suggesting continued optimism.

“The upsurge in construction and manufacturing sector growth as per the 2Q 2024 advance GDP data, also pointed towards the continued strength in the investment spending data for the quarter, for which the final GDP estimate is scheduled to be released on August 16,” it added.

-- BERNAMA