KUALA LUMPUR: The gross domestic product (GDP) is expected to surpass the upper bound of the official target of 4.0–5.0 per cent, says Public Investment Bank Bhd (PublicInvest Research).
The firm said this was due to the robust performance in the second quarter of 2024 (Q2 2024), where GDP growth reached 5.9 per cent year-on-year (YoY).
It said that the GDP in the first half of 2024 (1H24) of 5.1 per cent already exceeded its full-year target of 4.7 per cent for 2024.
"Given the sustained positive growth drivers expected to continue supporting economic momentum in 2H24, we anticipate that GDP could surpass the upper bound of the official target range.
"Consequently, we believe there is also a strong likelihood that the government will revise its official GDP growth forecast of 4.0 per cent 5.0 per cent for 2024 higher when Budget 2025 is tabled on 18 October," it said.
The firm anticipates headline and core inflation to average within the forecasted ranges of 2.0 per cent - 3.5 per cent and 2.0 per cent - 3.0 per cent YoY, respectively, maintaining its in-house projection of 3.0 per cent YoY for headline inflation, with risks skewed towards the lower bound of the official range, contingent on the timing of RON95 subsidy rationalisation.
It added Bank Negara Malaysia's (BNM) neutral stance in the latest monetary policy statement, coupled with persistent ongoing risks, strengthened its expectation that the benchmark interest rate will remain unchanged at 3.00 per cent throughout 2024.
"Since September 2023, BNM's forward guidance has consistently reflected a preference for maintaining current monetary settings, indicating no urgency for policy recalibration.
"At the prevailing OPR, the MPC assesses that the monetary policy stance remains supportive of economic activity while aligning with the current inflation and growth outlook."
As for the local currency, it said ongoing government measures are likely to provide additional support to the ringgit as the year progresses.
"We project the ringgit to trade within the 4.40- 4.45 range by year-end, factoring in the anticipated commencement of the US Federal Reserve's rate cut cycle next month."