RHB Revises Upward Forecast For Malaysia's 2024 GDP Growth To 5.0 Pct

KUALA LUMPUR, Aug 16 (Bernama) -- RHB Bank Bhd has revised its forecast for Malaysia's gross domestic product (GDP) growth in 2024 to 5.0 per cent year-on-year (y-o-y) from 4.6 per cent previously amid the growth acceleration in the second quarter (2Q) of 2024. 

The bank said the catalyst for the upgrade was based on three key factors, namely stronger-than-expected 2Q 2024 GDP growth at 5.9 per cent, the expectation that GDP growth would remain robust at 4.9 per cent in the second half of 2024, and continued resilience in investment and export performance.

 In a note today, RHB Bank said its GDP leading index model forecasts Malaysia's GDP growth to be at 5.2 per cent y-o-y in the third quarter and 4.6 per cent y-o-y in the fourth quarter.

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On the downside risks, it noted that there would be some dampening effect on consumer spending amid lower disposable income, in line with the retargeting of subsidies and social assistance allocation and the upward revision in services tax.

According to the bank, the inflation trajectory would hinge on the lagged impact from services tax revision and implementation of Low-Value Goods Tax, the timeline of RON95 subsidy rationalisation and its quantum coupled with the spillover impact from higher global commodity and food prices.

“Nevertheless, we believe the negative impact will be contained by the continued provision of social assistance towards the lower income group and differing impacts across income groups where the higher income group has relatively inelastic demand,” it added. 

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Meanwhile, MIDF Amanah Investment Bank Bhd is reviewing its full-year GDP forecast projection based on the stronger growth of 5.1 per cent y-o-y recorded in the first half of 2024, saying that it is likely to adjust upward from the existing forecast of 4.7 per cent.

“This is because the growth in domestic economic activities has been faster than expected, supported by positive income growth (while) inflation remained under control,” it said in its note.

At the same time, it said, the recovery in exports is expected to continue, with electrical and electronics (E&E) exports to be more encouraging in the latter part of the year on top of increased demand for non-E&E products.

“As indicated in our earlier report, we remain cautious that several downside risks could affect Malaysia’s growth outlook; weak growth in the US and China and escalation of geopolitical conflicts could weigh down on trade outlook, while higher inflation from government’s policy changes could hurt consumer spending plans,” it added.

-- BERNAMA