Malaysia’s economy is set to achieve growth targets, with GDP expanding 4.0-4.5pct

KUALA LUMPUR, June 28 (Bernama) – Malaysia’s economy is on track to meet its growth target, with gross domestic product (GDP) growth of 4.0 percent to 4.5 percent, according to Malaysian Ratings Corporation Bhd (MARK).

It said an upside to development would emerge from the possibility of fast-track project implementation under multiple development maps.

„However, sustaining private spending growth remains a challenge due to consumer expectations of higher inflation due to the current rationalization of subsidies,” it said in a statement following the release of its mid-year Macroeconomic Outlook 2024: Sustained Global Growth in a Modest Easing Cycle Today.

MARC said that while the tourism sector recorded high growth in the first four months of 2024, to sustain the rebound, continued improvement of tourism policies is necessary amid increased competition from ASEAN partners.

Besides, Malaysia’s deflationary trend has come to an end, although the inflation rate remains relatively moderate, with inflation rising to 1.8 percent in the first quarter of 2024 (1Q 2024) from 1.5 percent in 4Q 2023.

„We expect inflation to range from 2.5 percent to 3.0 percent with the second round of subsidy rationalization effects, while such policies are designed to contain the level of inflation volatility,” it said.

In addition, geopolitical uncertainties increase risks to inflation, along with volatility in commodity prices and increased costs through the supply chain.

However, it opined that Malaysia’s stable inflation and growth should give Bank Negara Malaysia the option to keep the overnight policy rate unchanged at 3.00 percent for 2024.

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MARC said global economic growth is expected to moderate in 2024, with growth projections for advanced European economies remaining relatively stable despite lingering weaknesses.

„The strength of the US economy may moderate the pace of policy rate cuts, leading to less coordinated global monetary policy easing compared to some central banks in Europe that have already begun cutting rates.

„Continued mixed readings on inflation, particularly in the US, led to lower expectations of interest rate cuts,” it added.

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