Hong Leong Investment Bank Bhd (HLIB) has revised its Q2 growth estimation upward to 6.1% year-on-year (y-o-y), following the release of latest indicators.
In a note today, the research house said its preliminary estimate was +5.4% y-o-y (Q1 2024: +4.2% y-o-y), higher than the department of statistics Malaysia’s (DoSM) advance estimate and consensus median forecast of +5.8% y-o-y.
“The growth is expected to be driven by acceleration across most sectors, primarily led by the services sector.
“On the demand side, the private consumption is expected to remain the key driver of growth, along with continued improvement in exports activity,” it added.
HLIB said Malaysia’s economic growth is expected to remain firm for the rest of the year, supported by resilient domestic demand amid the stable labour market and supportive income measures, as well as continued improvement in trade activity, aided by low base effect and the gradual global manufacturing recovery.
“In line with the upgraded Q2 forecast, we see upside bias to our 2024 GDP forecast of 4.8% y-o-y, pending the release of actual Q2 2024 GDP print.
“Following recent developments, we also now project the US Federal Reserve to administer three consecutive 25 basis points rate cuts for the remaining Federal Open Market Committee meetings this year,” it said.
This should further aid the ringgit’s recovery where the research firm now sees USD-MYR to end the year at 4.30 (previous: 4.60), with a full-year average of 4.60 (previous: 4.74), said HLIB.
Meanwhile, Maybank Investment Bank Bhd (Maybank IB) estimated Q2 2024 GDP growth at 6.8% y-o-y (Q1 2024: +4.2% y-o-y) versus +5.8% y-o-y advance estimate (AE).
“Our Q2 real GDP growth estimate is based on projections of faster growth versus AE growth for services.
“At the same time, indicators on demand-side GDP like retail and motor vehicle sales volume, imports of capital goods as well as volumes of goods export and import point to firmer Q2 2024 growth in private consumption, gross fixed capital formation as well as exports and imports of goods and services,” it added.