KUALA LUMPUR: CIMB Securities expects Malaysia's gross domestic product (GDP) to grow by 5.1 per cent year-on-year (YoY) in the third quarter of 2024 (3Q24), down from 5.9 per cent in 2Q24.
For 2024, the firm has maintained its growth forecast at 5.2 per cent (2023: 3.6 per cent), slightly above the government's projection of four to five per cent.
"This is reflecting our expectation of the continued recovery in external demand driven by the global tech upcycle, along with strong domestic spending, supported by robust investments and resilient consumer spending," it said in a note today.
Meanwhile, Malaysia's industrial production index (IPI) growth expanded 4.7 per cent YoY in the first two months of 3Q24, which outpaced the 4.5 per cent pace in 2Q24.
This was underpinned by an acceleration in manufacturing growth, electricity generation, but weighed down by a sharp decline in mining output.
Looking ahead, CIMB said the improvement in global trade activity and robust domestic demand are expected to sustain the momentum of Malaysia's industrial recovery.
"The S&P Global Malaysia Manufacturing Purchasing Managers' Index (PMI), an early gauge of manufacturing performance, remained supported at a reading of 49.5 in Sept (Jul-Aug: 49.7), suggesting 3Q24 GDP growth continued at a similar trajectory to that seen in 2Q24."
"Moreover, Malaysia continues to benefit from the ongoing China+1 strategy, involving global companies relocating their operations from China to regional economies to navigate sanctions arising from the US-China trade conflict."
"This strategic shift has led to approved FDI increasing by 23.2 per cent YoY to RM74.6 billion in the first half of 2024 (1H24) after growing 15.4 per cent in 2023," it noted.
CIMB also noted that distributive trade volume growth for July to August remained supported at 4.7 per cent YoY, slightly moderating from 4.9 per cent in 2Q24, which bodes well for services activities in 3Q24.
It added that improving tourist arrivals and receipts, along with buoyant motor vehicle sales, continue to support the services sector in the second half of 2024 (2H24), underpinning their 2024 services sector growth estimate of 5.5 per cent.
"However, growth in the agriculture sector is expected to moderate due to a slowdown in crude palm oil production, which is projected to decline by seven per cent YoY in 3Q24," it said.