BMI, a Fitch Solutions company, predicts that Malaysia's economic recovery in the upcoming quarters will be bumpy amid tepid global demand. However, resilient investment activity and a tight labour market, should boost domestic activity and help the country achieve a real gross domestic product (GDP) growth of 4.4 per cent. "We maintain our forecast for Malaysia's real GDP growth at 4.4 per cent in 2024, which would be a lacklustre performance compared to Malaysia's potential where growth averaged 4.9 per cent between 2015 and 2019," said BMI. The research firm noted that recent GDP data indicated ongoing challenges from sluggish global demand, with exports continuing to be the primary impediment to growth. In the fourth quarter of 2023 (4Q23) exports contracted by 6.9 percent year-on-year (YoY), shaving 2.7 percentage points (pp) off overall growth. "The picture for domestic demand is more mixed. While private consumption slowed from 4.6 per cent YoY in the third quarter of 2023 (3Q23) to 4.2 per cent in 4Q23 and contributed 2.5pp to the headline figure, fixed investment growth picked up to 6.4 per cent in 4Q23 from 5.1 per cent and added 1.2pp to growth," it said. BMI anticipates that subdued global demand will decrease from 2.6 percent in 2023 to 2.1 percent in 2024, which will constrain the demand for Malaysian products and services. Furthermore, it noted that exports declined by 4.5 percent YoY in October 2023, worsening to 9.9 percent in December 2023. "Likewise, exports of electrical & electronic products, which constitute more than 38 per cent of total outbound shipments, contracted 12.1 per cent YoY in December, extending the 2.4 per cent contraction in October 2023," it noted. BMI predicts that Malaysian exports will increase by 5.0 percent this year however, compared to the 8.0 percent contraction experienced last year. "The weak outlook for Mainland China, where we expect growth to slow to 4.7 per cent in 2024, will also constrain external demand for Malaysia's exports. "This is less positive for Malaysia, which has always been reliant on Chinese demand. Throughout 2023, Mainland China accounted for 15 per cent of Malaysia's exports and continues to be Malaysia's top trading partner," it added. Nonetheless, BMI anticipates an uptick in investment activity this year, driven by Prime Minister Datuk Seri Anwar Ibrahim's allocation of RM90 billion (EUR17.35 billion) for development expenditure, which is expected to stimulate domestic construction operations. "While construction orders completed in 2023 have been on a gradual decline, at 6.8 per cent YoY in 4Q23, they remain on-par with pre-pandemic volumes. "In addition, the government has introduced a slew of initiatives under the MADANI Economy framework, Twelfth Malaysia Plan and National Energy Transition Roadmap (NETR) which we expect to help stimulate domestic investment," it added. Moreover, BMI said Bank Negara Malaysia (BNM) has concluded its rate hikes, with the current rate standing at 3.00 percent. It highlighted that the overnight policy rate has been raised by a total of 125 basis points, marking the most significant increase on record. "We further expect the BNM to leave rates on hold through 2024, suggesting that tight monetary conditions will become more keenly felt among interest rate sensitive sectors. "This is illustrated through lacklustre retail trade volumes, which fell from 5.9 per cent YoY in 3Q23 to 4.5 per cent in Q423," said BMI. (ICE KUALA LUMPUR)

Fonte notizia: 23 febbraio 2024, Kuala Lumpur