Summary

• Malaysia’s 3Q2024 gross domestic product (GDP) is set for stronger growth, driven by robust external demand and a continued recovery in tourism. In August, export growth remained solid at 12.1% (July: 12.3%), supported by increasing demand across the manufacturing subsectors. Meanwhile, the tourism sector, which has been steadily recovering, is expected to gain further momentum in 2H2024 with inbound visitors projected to reach the official target of 27.3 million for the year. This will further support our forecast of Malaysia’s full-year GDP growth of 4.8%.
• Month-to-date (MTD), the ringgit appreciated by 5.1% to RM4.13 against the US dollar, aligning with the weakening of the broad dollar index at 0.7% due to anticipated rate cuts in September. As a result, Malaysia sustained its net foreign inflows from bonds and equities, with inflows in August approaching RM11.5 billion (July: RM9.1 billion). This supported the Malaysian Government Securities (MGS) market, as yield rates broadly declined.
• The Federal Reserve (Fed) has initiated the first of its rate cuts in September in line with market expectations. The rate cut of 50 basis points (bps) was on the back of deteriorating employment data. Further rate cuts of up to 150 bps are expected to be carried over until the end of 2025, with 50 bps expected by end-2024.