KUALA LUMPUR: Hong Leong Investment Bank (HLIB) research has adjusted its fourth-quarter 2023 (4Q23) gross domestic product (GDP) growth estimate slightly downward to 3.3 per cent year-on-year (YoY) from 3.4 per cent due to recent indicators.
HLIB stated that growth is anticipated to be upheld by ongoing expansion in most sectors, despite the manufacturing sector experiencing its second consecutive quarter of contraction.
"On the demand side, private consumption is expected to remain the key driver of growth," it said.
The investment bank said the manufacturing sector is expected to contract again this quarter, with export-oriented manufacturing activity dropping by 2.8 per cent compared to last year, while domestic-oriented activity is up by 5.6 per cent.
"In the services sector, growth is slowing, with wholesale and retail trade up by 4.2 per cent, accommodation by 10.1 per cent, and food and beverages by 2.4 per cent YoY.
"Construction activity is also slowing, with a 6.8 per cent increase in construction work done compared to last year," HLIB added.
The research house said the mining sector is poised for a rebound, with production up by 4.3 per cent YoY, driven by a 3.6 per cent increase in crude petroleum and a 4.7 per cent rise in natural gas production.
Meanwhile agriculture, especially palm oil production, is forecast to accelerate by 3.0 per cent YoY.
HLIB noted that private consumption is anticipated to drive growth due to the recovery in the job market, with the unemployment rate returning to pre-pandemic levels (3.3 per cent in December, 3.3 per cent in November, and 3.4 per cent in October), and ongoing wage increases in both the services (3.3 per cent YoY) and manufacturing (2.9 per cent YoY) sectors.
"However, consumer spending is expected to be more restrained due to the high cost of living, as evidenced by softer retail sales figures for the quarter (2.9 per cent YoY)," it added.
HLIB anticipates Malaysia's economic growth to rise to 4.8 per cent YoY in 2024, supported by robust domestic demand and a global trade recovery driven by a low base effect.
"Favourable labour market conditions, the recovery from the global tech downturn, a continued rise in tourism activities, and realisation of investment approved are expected to support growth," it said.
