The investment bank said the expectation is aligned with the statistics department’s projection for the third quarter of this year (Q3 2024).

“We anticipate growth to slow further in the final quarter to around 4.6%, as growth momentum typically eases on a quarter-to-quarter basis.

“The growth outlook remains vulnerable to external factors, including potential slowdown in advanced economies due to the lag effects of higher interest rates,” it said in a note today.

Kenanga IB also highlighted that heightened geopolitical tensions in the Middle East and Eastern Europe also pose a risk, disrupting the global supply chain.

“Malaysia’s exports remain fragile, heavily dependent on China’s recovery and the US economic performance.

“The expected ringgit appreciation against the US dollar could reduce export receipts, especially from the US,” it added.

It further said that this is evident in September’s export data, where total exports fell by 0.3% down from a 12% rise in August, far below market expectations.

Notably, exports to the US slowed sharply to 9.1% (August: 45.4%) as the ringgit appreciated by about 9% year-on-year, averaging RM4.26 in September (September 2023: RM4.68).

“Overall, domestic demand remains the key growth driver, supported by a stable labour market, rising tourist arrivals, and ongoing realisation of approved investment.

“While we are cautious on the export outlook, we expect tech-related segments in the manufacturing sector to benefit from the global tech cycle,” Kenanga IB said.

Previously, the statistics department reported that advance estimates indicate that Malaysia’s economy grew by 5.3% in Q3 2024, following a robust 5.9% growth in the preceding quarter.

In its release of advanced GDP, the department noted that the economy grew by 5.1% from January to September 2024, compared to 3.8% in the same period last year.