KUALA LUMPUR (Nov 27): The Malaysian economy, as measured by its gross domestic product (GDP), is expected to grow between 4.3% and 4.6% in 2024, driven by the resurgence of the tourism sector, an improved labour market, and a rebound in the electrical and electronics sector, according to the Malaysian Institute of Economic Research (MIER).

“We can see from Budget 2024 that mega projects, especially in infrastructure, can boost our economy. More can be expected from the tourism sector as well, after the Covid-19 pandemic,” said MIER board member Tan Sri Dr Sulaiman Mahbob on Monday.

“There are also some signs of inflation reduction, as the latest consumer price index (CPI) data showed [that] the country’s inflation has dropped to 1.8%, the lowest in two years. For 2023, I think we can achieve around 3.9% of GDP [growth],” he said at the National Economic Outlook Conference organised by MIER.

Sulaiman, who is also the chairman of Malaysian Investment Development Authority (Mida), said Malaysia attracted RM703.7 billion worth of approved investments in the last three years, and that the multiplier effect could boost the country’s employment growth.

On the performance of the ringgit, he expects the local currency to hover around 4.40 against the US dollar. At the time of writing, the ringgit was trading at 4.6798 against the US dollar, after weakening 0.12% from its previous close.

“We expect the ringgit to strengthen in the second half (2H2024). One of the factors is the increase in [sales and] service tax (SST) to 8% (from 6%), as the government will be able to generate revenue and then put the [country’s] fiscal position on a stronger footing,” Sulaiman said.

“In terms of economic fundamentals, we remain solid. We have a diversified economy, adequate reserves and the right regulatory framework. There is no need for pegging, or for capital control,” he added.

Separately, Bank Negara Malaysia assistant governor Fraziali Ismail noted the probable soft landing of the US economy, and that the factors impeding the recovery of currencies, including the ringgit, are gradually diminishing.

“There is an increasing likelihood that the worst is behind us. Why am I saying that? There are signs that inflation in the US is slowing down. Because many quarters are no longer expecting the US to hike their interest rate in the fourth quarter. What we are seeing is that the US is likely to hit a soft landing,” he said.