Malaysia’s strong economic momentum to carry over into 2H 2024 and 2025

Published on 18 Sep 2024.

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RAM Ratings maintains its projection for Malaysia’s GDP growth in 2024 at 4.5%-5.5% (2023: 3.6%). The stronger and more sustained economic momentum in 1H 2024 provides a clearer signal of Malaysia’s economic recovery. Overall GDP growth accelerated over successive quarters, reaching 4.2% in 1Q 2024 and 5.9% in 2Q 2024 (1H 2024: 5.1%), from 2.9% in 4Q 2023. The acceleration in 2Q 2024 was driven by stronger private consumption (6.0%; 1Q 2024: 4.7%) and a further export recovery (8.4%; 1Q 2024: 5.2%), the latter boosted by the global tech upcycle. Growth was also supported by increased capital formation (11.5%; 1Q 2024: 9.6%) through higher capital investments and construction activities.

We expect economic growth to remain healthy in 2H 2024, building on the robust momentum from 1H 2024, which should provide a solid foundation for sustained expansion. Domestic demand will remain the anchor for Malaysia’s economic growth, supported by a healthy labour market, increased capacity building activity and continued rollout of multi-year infrastructure projects. 

Looking ahead to 2025, we have pencilled in a growth forecast of 4.0%-5.0%, as the economy enters a more stable growth phase after a turbulent few years. The economy is expected to benefit from the carryover effects of the stronger momentum observed in 1H 2024, with firmer conditions for domestic consumption and investment supporting its resilience. However, private consumption may face headwinds from the potential rollout of RON95 subsidy retargeting. While we expect the impact to be somewhat mitigated by continued subsidies and financial assistance for lower-income households, any unintended price ripple effects from a poorly executed rollout could disrupt private consumption momentum. On the global front, we remain cautious of escalating geopolitical conflicts, heightened US-China tensions and potential global trade or supply-chain disruptions.

 

Read the full Quarterly Economic Update report here.

 

Analytical contact
Tan Wan Ying
(603) 3385 2540
wanying@ram.com.my    

Woon Khai Jhek, CFA
(603) 3385 2512
khaijhek@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my

 

About RAM Rating Services Berhad (RAM Ratings)

Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Credit Rating Agencies. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 

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