CIMB KEEPS 2024 GDP GROWTH FORECAST AT 4.9 PCT, SEES OPR MAINTAINED TILL YEAR-END

KUALA LUMPUR, April 5 (Bernama) -- CIMB Investment Bank Bhd has maintained its forecast for Malaysia's 2024 gross domestic product (GDP) growth at 4.9 per cent and reiterated its Overnight Policy Rate (OPR) projection of 3.00 per cent until end of the year.

It said early signs of improving economic activity were underpinned by a rebound in export volume in the first two months of this year following a year-on-year (y-o-y) contraction in the fourth quarter (4Q) of 2023, a manufacturing Purchasing Managers’ Index of 49.0 in 1Q 2024 versus 47.5 in 4Q 2023, and Industrial Production Index growth of 4.3 per cent y-o-y in January 2024.

“The acceleration in South Korea’s exports – a trade bellwether – underpins stronger momentum ahead for Malaysia’s export-oriented industries, in particular electrical and electronics,” the bank said in its Treasury and Market Research report.

bootstrap slideshow

However, it added that China’s economic weakness remains a key risk.

On the domestic front, the bank noted that greater political stability and clearer policy direction with the release of master plans could give impetus to investment activity, underpinned by a 23 per cent y-o-y increase in approved investments in 2023.

“Approved investments in the manufacturing sector account for 46 per cent of the total, and 30 per cent of those were implemented last year, implying a strong investment pipeline on top of existing infrastructure projects.

“Job creation continues to underpin a healthy labour market, which alongside social assistance measures by the government, could partially offset the cost of living pressures on private consumption, especially among low-income households,” it added.

Meanwhile, CIMB said Bank Negara Malaysia retained its data-dependent monetary policy stance amid inflation risk from subsidy rationalisation plans.

While noting there are upside risks for headline inflation, CIMB said the incremental impact is milder following the decision to exempt the logistics sector from the service tax, the deferment of high-value goods tax, and a 3.3 per cent reduction in transport weightage in the latest Consumer Price Index re-weighting exercise.

“The government’s gradual subsidy recalibration approach suggests the RON95 price adjustment may be staggered over a longer period of time which should keep a lid on inflationary pressure, but also lifts medium-term inflation trajectory relative to its long-term average (2011-2019: 2.2 per cent y-o-y).

“Pending clarity on the timing and quantum of RON95 subsidy reform, BNM will likely be an outlier in the impending global rate cut cycle,” it added.

-- BERNAMA