KUALA LUMPUR: Analysts have projected Malaysia’s economy to expand between 4% and 4.3% this year and have mixed views on the overnight policy rate (OPR) following the slower-than-expected gross domestic product (GDP) growth in the second quarter (2Q) of the year.
RHB Bank Bhd economist Chin Yee Sian and associate research analyst Wong Xian Yong said 2Q GDP was weaker than the Bloomberg consensus estimate of 3.3% year-on-year (y-o-y) and in-house forecast of 3.5% y-o-y.
They said the modest 2Q growth was dragged by weakness in external demand, coupled with normalisation of consumer spending on the domestic front.
Hence, they have revised their 2023 GDP growth forecast to 4.3% y-o-y from 5% y-o-y earlier, as they expect the moderation in consumer spending to continue into 3Q.
“Contraction in export data on a y-o-y basis is likely to be extended into 3Q as well,” they said in a note.
On the OPR prospects, Chin and Wong anticipated that Bank Negara would keep the benchmark rate unchanged at 3% during its September monetary policy committee meeting, given the weakening economic momentum.
“Our 2023 peak OPR forecast is maintained at 3.25%, with the balance of risk tilting towards 3%,” they said.
Meanwhile, MIDF Research kept its 2023 GDP forecast at 4.2% y-o-y, as it expects the strength in domestic demand to be the main driver for growth.
“Looking at the continued rise in domestic spending, we opine the expansion can be sustained in the second half of 2023, given the positive labour market conditions, growing income growth and supportive as well as accommodative economic policies,” it said. — Bernama
