Economists confident GDP will reach around 5.8 percent in the second quarter of 2024

KUALA LUMPUR: Economists are confident that Malaysia’s Gross Domestic Product (GDP) for the second quarter of 2024 will grow at 5.8 percent, compared to 4.2 percent in the first quarter of this year.

According to Bernama, they believe that GDP growth will be driven by robust industrial activity, higher crude palm oil prices, declining unemployment, and increased spending.

Economists also agree that the economy is well-positioned to grow between 4.0 and 5.0 percent for the entire year of 2024, with accounting bodies reporting a significant increase in global confidence in Malaysia following its clear economic resilience.

Chief Economist of Bank Muamalat Malaysia Bhd, Dr. Mohd Afzanizam Abdul Rashid, stated that the GDP growth for the second quarter of 2024 will align with the Malaysian Department of Statistics’ (DOSM) initial projection of 5.8 percent.

Speaking to Bernama, he said the momentum of economic growth will continue through the second quarter of 2024, surpassing the 4.2 percent growth of the first quarter.

Mohd Afzanizam mentioned that current data indicates that the Malaysian economy is expected to perform well in June.

He emphasized that the country recorded higher growth in the volume index of services and the industrial production index, which increased by 6.7 percent and 4.5 percent, respectively, in the second quarter of 2024.

He noted that crude palm oil production rose by double digits to 15.9 percent compared to 3.4 percent previously, indicating increased export earnings from the country’s main non-oil commodity sources.

Additionally, Mohd Afzanizam stated that the unemployment rate remained at 3.3 percent for three consecutive quarters, but the number of unemployed individuals decreased to 557,800 in the second quarter of 2024 from 561,100 in the first quarter of 2024.

“In this regard, the Malaysian job market may have reached full employment status, indicating that there are many jobs available and more people have employment and income.

“The introduction of flexible withdrawal accounts by the Employees Provident Fund, along with cash transfer programs, will facilitate a higher growth trajectory in the near term.

“Consequently, the GDP for the second quarter of 2024 is expected to be higher than the previous quarter,” he said.

Professor of Practice and Director of the Banking Research Center at the Asia School of Business, Ozer Karagedikli, echoed Mohd Afzanizam’s sentiments, stating that the projected GDP growth of 5.8 percent boosts confidence in the country’s economic strength.

Karagedikli remarked that Malaysia has significant economic potential, thus a growth rate between 4.0 and 5.5 percent may be achievable.

He noted that while this range is broad, achieving consistent growth of nearly six percent is expected to be challenging.

“It’s not that straightforward, as achieving a consistent growth rate of nearly 6.0 percent year-on-year is reasonable, but it may face challenges without significant reforms to enhance productivity and economic competitiveness,” he said.

Meanwhile, the Global Economic Situation Survey by the Association of Chartered Certified Accountants (ACCA) and the Chartered Institute of Management Accountants found that confidence among accountants and financial professionals globally has increased regarding Malaysia’s economy, especially for the second quarter of 2024.

ACCA stated that the Asia Pacific region, including Malaysia, has shown significant resilience, providing a clearer picture of regional economic trends and risk priorities.

“Malaysia, as part of the Asia Pacific region, reflects this positive trend. The country’s manufacturing sector has seen significant improvements, driven by increased global demand and technological advancements,” it stated.

According to the survey, Malaysia’s recent government initiatives to stimulate the digital economy and improve infrastructure continue to support this growth.

“Key policies such as the National Investment Aspirations and the Malaysian Digital Economy Action Plan have played a vital role in driving economic resilience,” it said.

Global Chief Economist at Juwai IQI, Shan Saeed, also projected GDP growth to be between 4.0 and 4.5 percent in the second quarter of 2024, driven by Malaysia’s overall strong economic performance amidst global economic uncertainty, geopolitical risks, and declining equity markets in the West.

He noted that the uncertain global economy has allowed Malaysia to remain a beneficiary, continuously attracting investment as investors shift to countries with robust infrastructure investments.

“Consumption and investment (among GDP indicators) are expected to remain strong, thereby reinforcing economic stability. Meanwhile, the arrival of tourists, information and communications technology (ICT), and commodity exports are sending positive signals to the market,” he said.

On July 19, DOSM announced that Malaysia’s economy is projected to grow by 5.8 percent in the second quarter of 2024, up from 4.2 percent in the previous quarter, marking the highest growth since the fourth quarter of 2022, which recorded 7.4 percent.

Chief Statistician Datuk Seri Dr. Mohd Uzir Mahidin stated that for the first half of 2024, GDP increased by 5.0 percent compared to 4.1 percent last year.

He said Malaysia’s economy is expected to maintain its growth momentum, supported by domestic factors and driven by exports, with positive prospects throughout this year.

Bank Negara Malaysia (BNM) will release the official GDP data for the second quarter of 2024 on Friday.