Summary 

• Global economic growth is expected to sustain a moderate level in 2024. Growth forecasts for advanced European economies remain relatively stable despite lingering weaknesses. The strength of the US economy may moderate the pace of policy rate cuts, potentially leading to a less synchronised global monetary policy easing, as some central banks in Europe have already begun reducing rates. Persistent mixed readings on inflation suggest a cautious outlook for a moderate global easing cycle.
• Regional trade activities rebounded strongly amid improving external demand and sustained growth in semiconductor sales. Malaysia’s Purchasing Managers’ Index (PMI) marked an expansionary phase for the first time since September 2022, indicating spillover from the regional trade rebound and tech upcycle.
• Malaysia’s economy is set to meet its growth target, with our projection being between 4.0% and 4.5%. An upside to growth in 2H2024 would emanate from faster implementation of projects under multiple development blueprints. Sustaining private spending growth is challenged by consumer expectations of higher inflation due to the ongoing reduction of subsidies.
• While Malaysia’s inflation rate has remained relatively mild, we noted an end of the disinflationary trend in April. We expect inflation of 2.5%-3.0% given second round effects as subsidies are reduced. We note that supply constraints are resurfacing as global geopolitical tensions persist.