By Rahul Trivedi
BENGALURU- Malaysia’s economy likely grew at its fastest pace in 18 months in the second quarter of 2024, thanks to a strong rebound in exports and higher household consumption, according to a Reuters poll of economists.
The Aug. 7-13 poll of 20 economists predicted Southeast Asia’s third-largest economy expanded 5.8 percent in the April-June quarter, in line with advance estimates released in July, compared with the same period a year earlier. That would mark the fastest growth since Q4 2022, with forecasts for the data due on Aug. 16 ranging from 5.0 percent to 6.8 percent.
“A downturn in exports, especially those for technology and electronics products that Malaysia has been suffering since last year and into the early part of this year, seems to be bottoming out and … we’re starting to get that pick up into the second quarter of this year,” said Brian Tan, senior regional economist at Barclays.
Exports rose 9.1 percent in April and 7.3 percent in May, respectively, before moderating to 1.7 percent in June on a year-on-year basis. Government data showed exports grew 3.9 percent in the first half of 2024.
Malaysian exports, which heavily rely on Chinese demand, are likely to experience a boost from renewed economic ties between the two nations.
“We continue to hold an optimistic view on Malaysia’s cyclical growth outlook, and will watch for investment trends, given increased investors’ interest especially on the foreign direct investment front,” wrote Chua Han Teng, economist at DBS.
Economic growth was expected to average 4.4 percent in 2024, a separate Reuters poll showed, which was in line with Bank Negara Malaysia’s estimate of 4.0 percent to 5.0 percent .
Malaysia’s economy grew faster than expected in the first quarter of 2024, helped by household spending and a turnaround in exports, though some analysts said the rebound could be short-lived with price pressures set to increase.
Gross domestic product rose 4.2 percent in the January-March period from a year earlier, central bank and government data showed on Friday, surpassing the 3.9 percent growth forecast by a Reuters poll and advance estimates released by the government. Annual growth in the final quarter of 2023 was revised down slightly to 2.9 percent.
Risks to expansion include weaker-than-expected global growth, lower commodity prices, and further escalation of geopolitical conflicts, he said.
On a quarter-on-quarter seasonally adjusted basis, the Malaysian economy grew 1.4 percent, compared with a 1 percent contraction in the fourth quarter of last year, the data showed.
The central bank maintained its 2024 economic growth projection of 4 percent to 5 percent. The economy expanded 3.7 percent in 2023, a sharp drop from a 22-year high of 8.7 percent in 2022.
