Malaysia’s Leading Index (LI) increased faster by +2.3%yoy in Mar24 (Feb-24: +2.1%yoy), attributable to the robust performance of Bursa Malaysia industrial index (+25.4%yoy) and real imports of other basic precious & other non-ferrous metals (+24.8%yoy).
Against the previous month, LI declined -0.5%mom (Feb-24: +0.5%mom), the first contraction in 6 months, mainly dragged by the lower number of housing units approved. Meanwhile, current economic conditions improved further as the Coincident
Index (CI) rose +2.3%yoy (Feb-24: +1.9%yoy) as 4 components contributed positively towards the index. Compared to Feb-24, CI increased by +0.6%mom (Feb-24: +0.2%mom), the fastest expansion in 10 months. All components except total employment (manufacturing) at -0.1%, contributed positively towards the month-onmonth gain.
Looking at the trends in LI and CI, MIDF said it expects positive growth momentum to continue in the coming quarters. MIDF says it expects Malaysia’s economy continue to grow underpinned by growing domestic spending and recovering external trade.
The house maintains its projection that Malaysia’s economy will grow stronger at +4.7% this year (2023: +3.7%), which will be supported by the external trade recovery and growing domestic spending. We continue to expect domestic demand will continue to grow backed by positive labour market conditions, rising income and recovery in the tourism sector (and spending). As a highly open economy, Malaysia will also gain from increased global demand for commodities and the improvement in the global E&E trade.
Despite the optimism, MIDF cautions that Malaysia’s growth outlook could be negatively impacted by several downside risks such as possible economic downturn in major economies like China and the US, renewed escalation in geopolitical and trade tensions, and potential disruption to the global supply. On the domestic front, the house said it is closely monitoring the possible inflationary effects from the government’s planned policy changes, particularly the hikes in transport costs because of the subsidy rationalisation which could weaken consumer sentiment and constrain their discretionary spending plans
