Malaysia's Economic Growth To Remain Modest Amid External Challenges - Analyst

KUALA LUMPUR, Nov 18 (Bernama) -- Malaysia’s economic growth will remain modest for the rest of 2024, citing weakening external demand and ongoing global policy uncertainties, said Hong Leong Investment Bank Bhd (HLIB).

It maintained its 2024 gross domestic product (GDP) growth forecast at 5.0 per cent year-on-year (y-o-y).

For 2025, HLIB projects sustained growth at the same rate, supported by robust household spending and tourism activities, along with income-boosting measures such as civil servant wage hikes, an increase in the minimum wage, and withdrawals from Employees Provident Fund (EPF) Account 3.

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“Continued improvement in export activity is also expected to support growth. In addition, further progress of multi-year projects and healthy investment intentions will support investment growth,” it said in a research note.

Public Investment Bank Bhd (PIB) said Malaysia’s economic growth in the coming quarters is projected to be anchored by strong investment activity and resilient household consumption, supported by export performance.

Investment activity would likely gain traction from the ongoing execution of multi-year infrastructure projects in both the private and public sectors, alongside catalytic initiatives under national development plans and increased realisation of approved investments.

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“Private consumption is expected to remain robust, driven by sustained income growth and the rollout of enhanced policy measures, further bolstering domestic demand.

“On the external front, exports are anticipated to benefit from positive spillovers from the global tech recovery, while the tourism sector is set to witness continued momentum with rising tourist arrivals and elevated spending levels,” it said.

Maybank Investment Bank Bhd has revised its 2025 growth forecast downward to 4.9 per cent from 5.1 per cent amid increased external uncertainties following Donald Trump’s recent victory in the US presidential election.

It said the biggest risk factor to the growth outlook is US trade policy as “Trump 2.0” pledged higher tariffs on all imports from China and globally.

“Domestically, the key positive - thus mitigation to the externally driven downside risk - is that our “investment upcycle” thesis for Malaysia is intact, underpinned by the implementation of robust approved investments as well as projects and initiatives under MADANI Economy,” it said.

Meanwhile, PIB said Malaysia’s current account surplus is projected to expand to RM49.1 billion or 2.4 per cent of gross national income (GNI), underpinned by broad-based improvements across key sectors, as outlined by the Ministry of Finance.

It said the goods account is expected to post a higher surplus of RM125.6 billion, supported by stronger trade momentum with major trading partners, while the services account is anticipated to see a reduced net outflow of RM16.8 billion, buoyed by increased earnings in the travel, transport, and other services segments.

“The current account surplus is forecasted to rise further to 2.3 per cent of GNI in 2024, up from the RM28.2 billion (1.6 per cent of GNI) recorded in 2023, reflecting a notable improvement despite last year’s headwinds,” it said.

-- BERNAMA