KUALA LUMPUR: Standard Chartered expects Malaysia's gross domestic product (GDP) to pick up to 4.8 per cent and the ringgit to outperfom regional currencies in 2024.
Domestic demand is likely to drive GDP growth in 2024.
After underperforming in 2023, the ringgit is expected to surpass regional counterparts in 2024, driven by factors like the Federal Reserve's pivot, stable Chinese Yuan (CNY) sentiment, large acumulation of onshore US dollar deposits.
It should also benefit from further recovery in tourism and the bottoming of the electronics cycle
"Amidst global uncertainties that are expected in 2024, the ringgit may actually benefit, especially if the US dollar correction is sustained amid softer US economic growth. On top of this, Malaysia is expected to have a steady year ahead as domestic demand and consumer spending will be the anchor in driving the country's growth performance this year," Standard Chartered ASEAN and South Asia chief economist Edward Lee said in a statement.
"Against this backdrop, Malaysia's economy is expected to remain steady in 2024 amidst global uncertainties. But moderation is expected in the pace of expansion, with average 2024 growth to be softer than in 2023 on a quarter-on-quarter basis," Standard Chartered said in a statement.
It estimates that the economy grew 4.3 per cent in 2023.
External demand could face challenges from the tight global monetary policy and subdued growth in China but a bottoming out of the electronics cycle is expected to provide some relief.
Malaysia's consumer spending is expected to slow in 2024 with subsidies removal dampening consumer spending.
In terms of investments, the public sector is expected to surge due to infrastructure projects like East Coast Rail Link and MyDIGITAL 5G, while private sector investments may be soft in the first half of 2024 due to high funding costs.
Standard Chartered expects core inflation to remain benign and Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate at three per cent in 2024.
Standard Chartered qualified however that stronger-than-expected economic growth which causes any subsidy removal to lead to second-round inflationary effects, could drive up core inflation, and result in further tightening by BNM.
