According to AmBank Research, the gross domestic product (GDP) is likely to show an 8.4% growth year-on-year (y-o-y) in the second quarter (Q2) of this year, against the consensus forecast of 6.9%.

The research house has attributed its brighter outlook mainly due to the robust external trade performance, which saw a 30% improvement y-o-y.

The GDP growth for Q1 was 5%.

The high GDP growth has been driven by solid exports of electrical and electronics products that surged by 38% y-o-y (Q1 2022: 27%) and commodity-based items such as petroleum products that leapt 72.9% y-o-y (Q1: 51.5%) and palm-oil based exports, which jumped 49.4% y-o-y (Q1: 67%).

“We are also expecting strong private consumption in Q2 2022 from the pent-up demand, EPF withdrawals, improving job market, higher wages and improving confidence.

“Data has already reflected strong retail sales as the April-May average hit 17.6% y-o-y, compared to January-March’s average of 8.6%,” it said in a note today.

The Q2 GDP data is scheduled to be announced by Bank Negara on Friday.

The research arm of AmBank Group noted that despite the wider GDP expansion during the second quarter, it remains on the lookout for certain factors going forward including the rising cost of living that is expected to weigh on consumer spending.

The other factors are the external headwinds of slower global growth and trade, supply chain disruptions and high freight as well as commodity prices.

“The labour shortage has resulted in huge opportunity revenue loss plus a dearth of talents. The geopolitical tension in Ukraine and now between China and Taiwan will also be the factors that will have an impact on our economy moving forward.

“On the whole, we maintain our view of a 5.6% GDP growth in 2022 with an upside of 6% and downside of 4.8%,” it said.