KUALA LUMPUR – Malaysia’s GDP forecast by MIDF Research has been upgraded following the stronger-than-anticipated performance recorded in the second quarter of the year.
The new GDP prediction provided by the research house is revised upward to 6.6%, which is an increase over the previous forecast of 6.0%.
In a recent statement, it said that it anticipates Malaysia’s GDP growth momentum to continue into the second half of the year following the official data which shows better prospects as indicated by the recent Leading Index.
MIDF Research said that the momentum will be driven by increased spending and commercial activities following Malaysia’s transition into the COVID-19 endemic phase with relaxed limitations and greater tourist arrivals.
Furthermore, it said that the measures such as the government cash handouts as well as withdrawals from the Employees Provident Fund had helped to drive spending in the second quarter of this year, there is likely a more normalised growth for domestic spending during the later part of this year.
Additionally, the research house said that an improvement in the labour market and improved income expectations will continue to promote activity in domestic spending.
With regards to external trade, MIDF Research is anticipating that the expanding external demand, particularly for the electrical and electronics (E&E), petroleum, and the palm oil sectors, will also further drive Malaysia’s GDP growth outlook for the year.
Despite that, it cautioned of the potential downside risks caused by external factors. These include weaker growth prospects in the country’s major trading partners such as China and the US, continued supply chain disruption, and geopolitical tensions.
However, it added that even with the external uncertainties, Malaysia’s GDP growth can achieve above 6.0% given the strength and the sustained improvement in domestic demand.
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