2Q GDP growth likely to surpass 6%

Services sector leads the way in country’s development

“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.”

Hong Leong Investment Bank Research

PETALING JAYA: Malaysia’s economic growth is likely to exceed 6% for the second quarter of this year (2Q24), surpassing the government’s initial estimate, according to several research houses.

Hong Leong Investment Bank (HLIB) Research put its 2Q24 gross domestic product (GDP) growth forecast at 6.1%, while Maybank Investment Bank (Maybankib) Research’s projection stands at 6.8%.

The forecasts are higher than the Statistics Department’s initial estimate of 5.8% GDP growth for 2Q24, released last month.

The country’s economy expanded 4.2% in 1Q24.

Bank Negara is scheduled to release the 2Q24 GDP numbers this Friday.

In its report, HLIB Research said 2Q24 GDP growth was expected to accelerate to 6.1% on the back of stronger growth across most sectors, particularly the services sector.

“On the demand side, private consumption is expected to remain the key driver of growth, along with continued improvement in exports activity,” it wrote.

“We expect an acceleration in the services sector, in line with the stronger volume of index of services showing in 2Q24, mainly attributed to the stronger growth in the business services and finance segment, followed by the wholesale and retail trade and food and beverage and accommodation segment in tandem with the rise in tourism activities and the Hari Raya celebrations in April,” it added.

Following its strong 2Q24 GDP estimate, HLIB Research said it expects an upside bias to its full-year GDP growth forecast of 4.8%, pending the release of the full 2Q24 GDP print.

“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 a low base effect and the gradual global manufacturing recovery,” it said.

Meanwhile, Maybank IB Research cited stronger 2Q24 indicators on output and key economic activities, as the basis for its 6.8% GDP growth estimate for the quarter in review.

“Our 2Q24 GDP growth estimate is based on projections of faster growth compared with the advanced estimate for services and manufacturing, despite lower projections (compared with advanced estimate) for construction, agriculture and mining,” the research house said.

“At the same time, indicators on demandside GDP like retail and motor vehicle sales volume, imports of capital goods, as well as volumes of goods export and import, point to firmer 2Q24 growth in private consumption, gross fixed capital formation, as well as exports and imports of goods and services,” the research house added.