PETALING JAYA: Malaysia’s economy is expected to remain robust in the third quarter of this year (3Q24), driven by the manufacturing sector and services activities.
According to brokerages’ forecasts, the real gross domestic product (GDP) growth will likely sustain above 5% for the three months to September 2024.
CIMB Research, for one, expects 3Q24 GDP growth to come in at 5.1%, attributing the economic resilience to robust manufacturing and services activities. The economy expanded 5.9% in 2Q24, up from 4.2% in 1Q24.
The Statistics Department is expected to release the advance 3Q24 GDP estimates on Oct 21. In its report, CIMB Research noted that despite slowing in August, manufacturing activity grew at a decent pace in tandem with the increase in exports and manufacturing sales.
“Gains were seen across sub-sectors such as food and beverage; electrical and electronics; and transport equipment, but were offset by slower gains in petrochemicals; textiles and wearing apparel; minerals and metal products; and wood and paper products,” the brokerage wrote.
Further, it pointed out that the industrial production index (IPI) growth of 4.7% year-on-year (y-o-y) in the first two months of 3Q24 outpaced the number in 2Q24 at 4.5% y-o-y.
“This was underpinned by an acceleration in manufacturing growth and electricity generation, but weighed down by a sharp decline in mining output,” CIMB Research said.
Similarly, Maybank Investment Bank (Maybank IB) Research estimated that 3Q24 GDP growth would be above 5%.
Pointing to August 2024 distributive trade index growth (3.8% y-o-y), IPI increase (4.1% y-o-y) and higher crude palm oil output (8% y-o-y), it said its monthly GDP tracker estimated that the economy grew 4.2% in August, slower than July’s number at 5.7%. Thus, the estimated average GDP growth for July to August 2024 stood at 4.9%.
“Caveat is our estimated monthly GDP growth for January 2023 to June 2024 under-estimated actual numbers by a median of 0.9 percentage points, so GDP growth could still be above 5% in 3Q24,” Maybank IB Research explained.
TA Research said it remained optimistic about the 3Q24 economic outlook, particularly with the manufacturing segment set to play a key role in driving Malaysia’s 3Q24 GDP growth.
“The purchasing managers’ index (PMI) for Malaysia’s manufacturing sector signals resilience, with the average PMI for 3Q24 standing at 49.6 – only a marginal dip from 49.7 in 2Q24,” the research house said.
“Manufacturing’s contribution to GDP is projected to rise by 4.5% y-o-y in 3Q24, slightly below the 4.7% y-o-y recorded in 2Q24. This robust manufacturing performance is expected to partially offset the decline in the mining sector, which contracted by 5.7% y-o-y in the July to August period, compared to a 2.4% y-o-y gain in 2Q24,” it added.
However, TA Research acknowledged that risks to future demand persisted as evidence suggested conditions would remain subdued in the short term.
