KUALA LUMPUR (Aug 9): Malaysia's economic growth in the second quarter of 2024 (2Q2024) could be even faster than the flash estimate, CIMB Investment Bank flagged on Friday.
Gross domestic product (GDP) may expand 6.0% year-on-year in April-June period, driven by "solid performance" for the services and manufacturing sectors, the research house said in a note. That compares to the Department of Statistics’ advance estimate of 5.8% expansion.
“We believe this likely marks the peak” year-on-year performance, CIMB said. Growth, however, will remain “buoyant” at above 5% in the second half, supported by strong investment pipeline and resilient consumer spending from cash transfers and civil servant salary hikes, as well as export recovery, it said.
Malaysia will release the GDP data on Aug 16.
At 6.0% growth year-on-year, the pace would be the fastest since 4Q2022 post-pandemic, and the strongest since 3Q2017 if the bounce from Covid-19 was excluded.
In 1Q2024, Malaysia's GDP grew by 4.2% year-on-year, thanks to higher household spending, stronger investment activities, and improvement in tourist arrivals. On a seasonally adjusted basis, GDP rose 1.4% quarter-on-quarter.
Services set for strong rebound
During 2Q2024, CIMB said the services sector — which accounts for more than half of Malaysia’s economic output — is poised for a "stellar rebound", exceeding the advance estimate of 5.6% year-on-year growth.
The volume index of services, a proxy for private sector services, rose 6.7% year-on-year in 2Q2024, led by the insurance sector that recorded its first expansion in nine quarters, the research house noted while also flagging improvement in consumer-facing industries.
Gains in retail trade, motor vehicle sales, and accommodation services underscored resilient household spending supported by Hari Raya celebrations, a low unemployment rate, modest inflation, and higher tourist arrivals, CIMB said.
Recovery of exports, a key market for Malaysian factories, "remains intact", it said. The research house pointed to a 4.9% year-on-year rise in the manufacturing index in 2Q2024, slightly ahead of the advance GDP manufacturing estimate of 4.7% year-on-year.
Outbound shipments gained 5.8% in 2Q2024 when compared to the same three months in 2023, data out last month showed.