Kenanga Revises Up Current Account Surplus Forecast To 2.7 Pct Of Gdp In 2024

KUALA LUMPUR, May 20 (Bernama) -- Kenanga Investment Bank Bhd has revised its 2024 current account (CA) surplus forecast to 2.7 per cent of gross domestic product (GDP) from 2.3 per cent previously, underpinned by a potential resurgence in exports, an upsurge in tourism and repatriation of foreign investment income.

The bank said the anticipated surge in exports, buoyed by the global technology boom in the second half of 2024, along with the revitalisation of tourism propelled by the government's initiatives and the nation's diverse attractions, is poised to significantly bolster the CA surplus in 2024.

“Furthermore, government policies aimed at attracting investment, coupled with the increasingly promising prospects of the domestic capital market and efforts to encourage repatriation of foreign income by government linked companies (GLCs) and government linked investment companies (GLICs), have the potential to significantly augment foreign inflows, further supporting the CA surplus,” it said in a note today.

On Friday last week, the Department of Statistics Malaysia announced that CA surplus surged to RM16.2 billion in the first quarter (1Q) of 2024, equivalent to 3.5 per cent of the gross domestic product (GDP), mainly fuelled by the income and goods accounts.   

Kenanga noted that this was a significant expansion compared to RM900 million (0.2 per cent of GDP) in the fourth quarter (4Q) of 2023, the biggest since 4Q 2022.

“Several factors are driving the surge in the CA surplus, including a reduced primary account deficit, a marginal surplus in the secondary account, an increased goods surplus, and a reduced deficit in the services account.

“Despite a higher GDP growth rate of 4.2 per cent year-on-year in 1Q 2024 from 2.9 per cent in 4Q 2023, the CA surplus has seen a notable increase,” it said.

Meanwhile, Maybank Investment Bank Bhd is maintaining its full-year 2024 CA surplus forecast at RM40 billion, or 2.1 per cent of GDP.

It forecast sustained CA surplus due to the rebound in exports of goods and services amid the global technology recovery cycle and continued post-pandemic tourism recovery as well as the ringgit-supporting measure of encouraging repatriation and conversion of foreign currency earnings by GLCs/GLICs and exporters.

“(These would) offset the impact of the expected more robust growth in gross fixed capital formation on lifting imports of goods and services, especially imports of capital goods,” it said.

-- BERNAMA