United Overseas Bank (UOB) expects Malaysia to revise its 2024 GDP growth target to 4.5% to 5.5%, up from the current 4% to 5%, during the upcoming Budget 2025 announcement on Oct 18. This revision reflects the stronger-than-expected economic performance in the first half of 2024.
UOB's Quarterly Global Outlook 4Q 2024 report highlighted that Malaysia's GDP growth reached 5.1% in the first half of 2024, surpassing earlier estimates. As a result, the bank raised its full-year GDP forecast to 5.4%, up from its previous prediction of 4.6%.
Several key factors are driving this upward revision:
- Global tech cycle recovery
- Increased tourism activities
- Continued government cash aid to targeted groups
- The implementation of budget measures and national master plan initiatives
UOB also noted that the seasonally adjusted growth rate rose to 2.9% quarter-on-quarter in the second quarter (2Q2024), marking the highest growth in two years and indicating steady recovery momentum.
The Ministry of Finance’s GEAR-uP programme, which involves RM120 billion in domestic direct investments over five years, alongside public market investments of RM440 billion, is expected to further enhance Malaysia’s economic outlook.
Additionally, the Public-Private Partnership Masterplan 2030 (PIKAS 2030), launched in September, is projected to increase private investment to RM78 billion by 2030.
Malaysia's labour market also remained strong, with unemployment steady at 3.3% and a record labour force participation rate above 70%. Private consumption is expected to be bolstered by Employees Provident Fund (EPF) withdrawals of RM15 billion this year, with additional withdrawals expected from 2025.
UOB added that salary hikes for civil servants starting in December 2024 and a review of private sector minimum wages are likely to provide further support for consumption next year.
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