KUALA LUMPUR: Malaysia is on track to meet its economic targets driven by the rebound in external trade and growth in domestic demand.
Hong Leong Investment Bank Bhd (HLIB) said high investment approvals in 2023, amounting to RM329.5 billion (a 23.0 per cent year-on-year (YoY) increase), are anticipated to provide buffers to private consumption.
Additionally, the firm noted that income-supportive measures such as the Employees Provident Fund (EPF) flexible Account 3 and the expected wage increase for civil servants in Dec are also expected to contribute to this buffer.
"We maintain our expectation for gross domestic product (GDP) to grow at 4.8 per cent YoY and Bank Negara Malaysia (BNM) to keep overnight policy rate (OPR) at 3.00 per cent until the year-end," it said in a note.
Meanwhile, HLIB said monetary indicators moderated in April following a softer expansion of both the narrow money supply (M1) which increased 7.1 per cent YoY and eight per cent YoY in March.
It added that the broad money supply (M3) increased 6.1 per cent YoY and 6.2 per cent YoY in March.
Similarly, reserve money growth also moderated (+2.1 per cent YoY; March: +6.6 per cent YoY), while, total leading loan indicators strengthened during the month.
This follows a rebound in loan applications (+14.0 per cent YoY; March: -12.7 per cent YoY) and loan approvals (+12.8 per cent YoY; March: -11.9 per cent YoY).
Loan disbursements also posted a rebound (+2.2 per cent YoY; March: -5.2 per cent YoY).
Additionally, HLIB said deposits growth was steady at five per cent YoY (March: +5.0 per cent YoY) as the pickup in business and household deposits offset the moderation in foreign deposits.
Both household loans (+6.4 per cent YoY; March: +6.3 per cent YoY) and household deposits (+4.6 per cent YoY; March: +4.5 per cent YoY) gained slight momentum.
Total loans growth was steady at six per cent YoY (March: 6.0 per cent YoY) amid stronger growth in both business and household loans.
Household loans growth also trended slightly higher (+6.4 per cent YoY; March: +6.3 per cent YoY) on the back of higher disbursements in passenger cars, properties and personal uses.
Loan applications posted a rebound (+14.0 per cent YoY; March: -12.7 per cent YoY) following stronger household and business applications growth.
For the household sector, HLIB said growth was mainly driven by higher loanapplications for personal uses, properties and passenger cars.
For the business sector, loan demand particularly increased for the wholesale and retail trade, construction, as well as finance and business sectors.
HLIB also said that foreigners remained net buyers of local bonds in April (+RM0.9 billion; March: +RM1.9 billion) but at a more modest pace.
The firm said this is likely due to the higher-than-expected inflation outturns in the US and delayed rate cut calls by Fed officials.
Meanwhile, foreigners remained net sellers of equities (-RM1.3 billion; March: -RM2.9 billion) during the month.