KUALA LUMPUR: MIDF Research has predicted that 2024 will be the year of recovery for the Malaysian economy, primarily on the back of external trade recovery.
MIDF Research director and head Imran Yassin Md Yusof said the research house expects 2024 to be a year when the economy and markets will cruise along.
“Many of the factors which influenced 2023 such as inflation and interest rates seem to have waned. Meanwhile, we believe that implementation of some of the government’s policies and a recovery in external trade will be key factors to monitor in 2024,” he told the press at MIDF 2024 Market Outlook yesterday.
MIDF Research predicts that Malaysia’s gross domestic product (GDP) growth will increase to 4.7% in 2024, up from the estimated 4.2% in 2023. This growth is supported by resilient domestic demand, a resurgence in external trade, stable monetary policies in major countries, a stronger recovery in China and favourable global commodity prices.
MIDF Research said 2023 started with the high expectation that the equities market will be driven by a pause in US Fed interest rates tightening cycle. However, the market had to wait almost a whole year due to stubborn inflation.
Meanwhile, the recovery of China’s economy was slower than expected. On the flip side, the downside risks did not materialise such as a recession in the US. Hence, the factor of US rate hikes will likely dissipate in 2024 and MIDF Research expects that the recovery of China’s economy will continue into 2024, supporting the recovery of Malaysia’s external trade.
MIDF Research said growth for the global economy in 2024 is expected to be more or less at the same pace as estimated for this year, where previous policy tightening had put a constraint on the growth in advanced economies.
Nevertheless, demand pressures on general prices have eased. While global production activities could pick up, recovering from the lows this year, consumer spending will remain key factor to support growth next year on the back of easing inflation, healthy labour market and rising income.
For trading countries, growth prospects will be more encouraging in 2024 benefiting from the recovery in global production and trade activities, but potentially limited by the expected slowdown in demand from the advanced economies.
The domestic economy is expected to be anchored by continuous steady consumer spending, busier tourism-related activities, and construction of infrastructure projects. Malaysia’s job market remains in good shape as reflected by the continuous positive growth in employment, decline in unemployment and lower jobless rate.
However, MIDF Research expects inflation rate to hover above 3.0% (at 3.2%) next year amid fuel targeted subsidy roll-out. Even though inflation rate is forecasted higher due to subsidy rationalisation efforts, real wage growth is expected to remain in positive territory.
