In a note today, the investment bank expects the economic expansion to be sustained in the second half of the year (2H2024), backed by higher household spending and tourist arrivals, as well as supportive income measures such as the civil servant wage hike and the Employees Provident Fund (EPF) Account 3 withdrawals.

HLIB said continued improvement in trade activity is also expected to boost GDP growth, aided by the low base effect and gradual recovery in the global tech sector.

Additionally, ongoing progress in multiyear projects and strong investment plans, as indicated by the Malaysia Investment Development Authority’s approval of RM83.7 billion worth of investments in the first quarter of 2024 (Q1 2024), are expected to support investment growth.

Meanwhile, Public Investment Bank said following the robust performance in Q2 2024, the 5.1% GDP growth in 1H2024 has already exceeded its full-year target of 4.7% for 2024.

“Given the sustained positive growth drivers which are expected to continue supporting economic momentum in 2H2024, we anticipate that GDP could surpass the upper bound of the official target range,” it said.

Hence, it believes that the government will revise its official GDP growth forecast of 4.0-5.0% for 2024 higher when Budget 2025 is tabled on Oct 18.

BMI, a Fitch Solutions company, also revised its 2024 growth forecast for Malaysia from 4.4% to 4.7% following the stronger-than-expected growth in Q2 2024.

However, it noted that the growth forecast is at risk of being lower if China’s economy slows down more than expected.

Additionally, it said the government’s decision to allow early withdrawals from the EPF could boost consumption and inadvertently lead to an uptick in price pressure.