In a statement, the bank said its latest forecast is based on the gradual improvements in the external sector, better distributive trade sales growth, robust labour market, and sustained and low inflation in the quarter.

“Base effects also matter, given that Malaysia’s growth in the same quarter in the preceding year was weighed down by the semiconductor downcycle, which was no longer the case in the previous quarter,” the note said.

It also said there is an upside to its subsequent Q2 2024 GDP growth forecast, subject to incoming data.

“The statistics department is scheduled to release Malaysia’s advance Q2 2024 GDP estimates tomorrow,” it said.

In addition, AmBank stated that there is a rising possibility of an upgrade on the fiscal year 2024 GDP growth should its Q2 2024 GDP forecast materialise.

“Should Q2 2024 come in at 5.3% y-o-y or higher, our in-house Malaysia’s fiscal year 2024 GDP should correspond accordingly,” it said, adding that its current fiscal year 2024 GDP growth forecast stands at 4.5% y-o-y.

The bank also expected private consumption to remain well supported amid favourable labour market prospects.

“However, our projections face downside risks from higher retail energy prices amid subsidy rationalisation,” it said.

Nevertheless, the bank said it believes Malaysia’s inflation has stabilised, with non-food and food and beverage inflation aligning with headline inflation.

“We noticed that non-food inflation has begun to outstrip that of food and beverages, contributing to the possibility of higher headline inflation in the coming months due to (non-food) accounting for 70.2% of the total consumer price index (CPI) basket,” it added.