KUALA LUMPUR: Maybank Investment Bank’s (Maybank IB) projection of 4.4 per cent growth for Malaysia’s economy in 2024 (2023: 3.9 per cent) is a mean reversion as the economy grew slower in 2023 due to the extraordinary base effect when growth surged almost nine per cent in 2022 with the opening up of the economy in the wake of the Covid-19 pandemic.
Maybank Group chief economist Suhaimi Ilias said the reason for the projected growth outlook is due to a combination of factors such as resilient consumer spending, continued positive momentum in investment growth, and an expected rebound of exports of goods and services.
"I wouldn’t say I am overly optimistic about Malaysia’s economic outlook this year because it’s a case of mean reversion, and the forecast is fair.
"I also think it is a pretty bearish outcome to be expected given the global landscape and domestic environment that we expect to happen this year, such as slower global growth as US economy ‘soft lands’ and China’s growth slows,” he said in a virtual 2024 Market Outlook Media Briefing today.
Meanwhile, regarding trade performance, Suhaimi said the situation in the Red Sea, which saw attacks on international shipping due to spillover from Israel’s attack on Gaza, will not derail Malaysia’s economic recovery.
However, he said there might be the risk of a delay in recovery resulting from supply chain disruptions due to the possible rerouting of affected commodities and products transported through the Red Sea.
"The other concern is the potential upside to inflation because of this disruption on the important Red Sea shipping route,” he said.
On the local currency front, Maybank Group’s regional head of Forex Research, Saktiandi Supaat, said the group is not expecting that the ringgit would hit RM4.80 against the US$1 in 2024, although it did touch the level back in October 2023, which was mainly driven by the US dollar’s strengthening.
He said the group forecasts the ringgit versus the US dollar to be at the RM4.70 level in the near to medium term and RM4.44 to 4.30 in the long term.
"We are not factoring any domestic worst-case scenario driving the ringgit to RM4.80 at this juncture.
"For Malaysia, we see the fair value spot moving towards RM4.10-4.30. However, the possibility of that (falling to RM4.80) happening would need certain external factors converging to lead the US dollar to strengthen substantially,” he added. - Bernama
