Moreover, it noted that the expectation for Malaysia’s gross domestic product (GDP) to accelerate in Q2 2024 has materialised, as indicated by its proprietary GDP leading index model, which accurately signalled Q2 2024 GDP growth of over 5% y-o-y.

“We expect external and internal drivers to spur growth for the rest of this year.

“We anticipate further acceleration in trade and manufacturing activities, coupled with continued resilience in domestic demand from increased consumer and investment spending,” it said.

The statistics department said Malaysia’s IPI expanded by 5.3% in July 2024, following a 5% growth in the previous month driven by a surge in manufacturing output.

In addition, RHB IB said IPI momentum gained pace in July, supported by ongoing expansion in export-oriented and domestic industries.

“The ringgit strengthened upon the IPI’s release at intraday trading to RM4.358 against the US dollar versus yesterday’s closing price of RM4.372, suggesting that Malaysia’s rosier fundamental prognosis has been one of the key drivers behind the ringgit’s recent recovery.

“We now think the ringgit will likely range between RM4.35 and RM4.50 per US dollar for the rest of this year, coupled with our in-house view for the US Federal Funds Rate to see a September and December cut amounting to a cumulative 50 basis points reduction,” it said.

The investment bank said a positive outlook for the manufacturing sector remains intact, fuelled by an improved global and domestic economic landscape, a global technology upcycle, and heightened investment appetite.

“Continued export growth and robust global semiconductor sales further support our positive assessment of Malaysia’s manufacturing industry.

“As an export-oriented economy, Malaysia is well-positioned to benefit from a rosier global economic outlook,” it added.