KUALA LUMPUR: RAM Ratings believes that there will be an upside lift for the economy in 2024 and has maintained its gross domestic product (GDP) forecast at 4.5 per cent to 5.5 per cent.
"The chance of a 'soft landing' appears to be higher for the global economy, with the International Monetary Fund (IMF) upping its 2024 global growth forecast by 0.2 per cent points to 3.1 per cent last month," the firm said in a statement.
RAM Ratings noted that Malaysia's GDP growth underperformed in 2023 (3.7 per cent versus consensus of 4.0 per cent), mainly due to weaker export demand and cooler consumption momentum.
Despite a relatively healthy start in the first quarter of 2023 (1Q23), it said persistent softening in global trade through the year led to a sharp contraction in overall exports, significantly dragging overall GDP growth.
Domestically, the firm said elevated price pressures and lapse of large policy support weighed on private consumption, resulting in a lower print of 4.7 per cent.
All said, it added that a strong pipeline of infrastructure and public projects as well as private sector capacity expansion helped to pad economic growth in 2023.
Meanwhile, RAM Ratings also highlighted that Malaysia's export growth contracted at a slower pace of 6.9 per cent in 4Q23 (2Q23: -11.1 per cent; 3Q23: -15.2 per cent) with the January 2024 print showing a rebound in growth to 8.7 per cent.
"Coupled with the predicted upcycle in trade and semiconductors, we may be seeing early signs of a turnaround in global trade.
"The IMF forecasts global trade growth to recover from 0.4 per cent last year to 3.3 per cent this year.
"Furthermore, the latest inflation print in January 2024 continues to point towards easing of price pressures, which along with a robust job market and supportive financial conditions could propel domestic demand higher this year," it noted.
Up ahead, RAM Ratings said key risks on the horizon remain, with the timing of interest rate cuts in the US exerting potential market volatility and for the domestic market, imported price pressures due to weak ringgit valuation.
The firm added that escalating geopolitical conflicts could threaten the global commodity market and supply chain again.
"Domestically, we remain watchful over the execution of RON95 subsidy retargeting in the second half of 2024 (2H24)," it said.
