The credit rating agency also believed that there would be an upside lift for the economy in 2024, despite the fourth quarter of 2023 (Q4 2023) performance, which grew at 3%.

It said the chance of a “soft landing” appears to be higher for the global economy, with the International Monetary Fund (IMF) raising its 2024 global growth forecast by 0.2% to 3.1% last month.

RAM Ratings said Malaysia’s export growth also contracted at a slower pace of 6.9% in Q4 2023 (Q2 2023: -11.1%; Q3 2023: -15.2%), with the January 2024 print showing a rebound in growth to 8.7%.

“Coupled with the predicted upcycle in trade and semiconductors, we may be seeing early signs of a turnaround in global trade.

“The IMF forecasts global trade growth to recover from 0.4% last year to 3.3% this year,” it said in a statement.

Furthermore, RAM Ratings said the latest inflation print in January 2024 continues to point towards easing of price pressures (as headline inflation remained at 1.5%), which, along with a robust job market and supportive financial conditions, could propel domestic demand higher this year.

“Up ahead, key risks on the horizon remain, with the timing of interest rate cuts in the US exerting potential market volatility and imported price pressures for the domestic market due to weak ringgit valuation.

“Escalating geopolitical conflicts could threaten the global commodity market and supply chain again,” it added.

Domestically, it remained watchful over the execution of RON95 subsidy retargeting in the second half of 2024.

It noted that Malaysia’s 2023 GDP growth stood at 3.7% versus the consensus of 4%, mainly due to weaker export demand and cooler consumption momentum.