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PETALING JAYA: The Malaysian economy has shown surprising resilience, with growth in the first half of 2024 exceeding expectations, according to Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai.
He noted that the economy expanded by 5.9% in the second quarter, up from 4.2% in the first quarter, driven by a strong export-led recovery, robust domestic demand, and a surge in tourist arrivals.
“This marks the highest growth rate since the first quarter of 2017, bringing the average growth for the first half of the year to 5.1%,” he said in a statement today, adding that the global economic landscape was shaped by several factors, including geopolitical conflicts, tight monetary policies and a slowing Chinese economy.
Despite these challenges, Soh said, the global economy, particularly the United States, has shown remarkable resilience.
“The US economy’s performance is crucial, as it will determine the future path of global growth. The Federal Reserve’s near-term policy challenge is to engineer a soft landing, balancing the risks of inflation and unemployment. Recent indicators, such as the unemployment rate and retail sales, suggest a gradual cooling of the labour market, giving the Fed confidence to consider rate cuts later this year.”
Soh also said China’s economy continues to face challenges, particularly in the property sector, weak business confidence and deflationary pressures. The economy grew by 4.7% in the second quarter, down from 5.1% in the first quarter. With industrial output slowing and unemployment rising, China’s economic outlook remains uncertain unless the government ramps up stimulus efforts.
Malaysia’s economic growth has been driven by a robust export sector, with real exports up by 8.4% in the second quarter, Soh said.
“This growth has been supported by strong demand for commodities, electronics, and petroleum products. The manufacturing sector has also benefited from capacity expansions and relocations, partly due to the US curbs on Chinese technology. For example, Infineon has opened a new semiconductor plant in Kulim, and Chery will start exporting from its new plant in Shah Alam by the end of the year,” he added.
The FMM president said private consumption exceeded expectations, with spending growing by 6% in the second quarter, and this was partly due to delayed subsidy cuts and new government policy measures, such as the creation of a third Employees Provident Fund account for immediate needs and emergencies.
A pay increase for civil servants is expected to boost spending further, he added.
“Private investments have shown robust growth, driven by multiyear infrastructure projects and the realisation of approved projects. The tourism sector has also performed strongly, with tourist arrivals up by 28.9% in the first half of the year, generating significant income for the country,” Soh said.
Inflation is expected to rise in the second half of the year, he added, with Bank Negara Malaysia projecting a manageable increase within the official forecast of 2% to 3.5%.
Meanwhile, Soh said, the ringgit has rebounded strongly against the US dollar, reaching an 18-month high, and is expected to maintain an appreciating bias in the coming months.
Given the stronger-than-expected growth momentum in the second quarter, FMM Research has revised upwards the economic growth projection for 2024. The new forecast suggests that growth will likely exceed the government’s target range of 4% to 5%, with a revised gross domestic product increase of 5.1%. Private investment and consumption spending have also been revised upwards, reflecting the economy’s strong recovery trajectory.
Soh said Malaysia’s economy is on a robust recovery path, driven by strong exports, private consumption, and investments.
“Despite global uncertainties, we expect the economy to continue its positive growth trend throughout the rest of 2024,” he added.
Source: https://thesun.my/business-news/fmm-says-malaysian-economy-shows-surprising-resilience-lifts-2024-growth-forecast-to-51-LJ12932328