Affin Bank expects economy to grow by 4.5pc in 2024, helped by recovery in exports

KUALA LUMPUR: Malaysia's economy is expected to grow at a stronger rate of 4,5 per cent in 2024 based on expectations of a recovery in exports due to higher demand for electric and electronic (E&E) products, in line with better prospects in global semiconductor sales.

Affin Bank Bhd estimated that the economy grew four per cent in 2023.

Affin Bank group chief economist Alan Tan Chew Leong said despite a weak performance in 2023, forecasts by the Semiconductor Industry Association indicate a significant positive shift from 9.4 per cent last year to a positive 13.1 per cent.

"This trend is pivotal for Malaysia, being a highly open economy heavily reliant on trade exports as a resurgence in global semiconductor sales, especially in demand from Western economies, is likely to benefit both China and the ASEAN region."

The Semiconductor Industry Association projects a 22.3 per cent global demand increase and a 12 per cent rise in the Asia Pacific region in 2024.

"Transitioning to Malaysia, considering the breakdown by region, the expectation is that a robust recovery in global semiconductor demand will positively impact Malaysia's exports, particularly in electronics," Tan said at Affin Bank's Macro Economic Outlook report 2024 media briefing today.

Notably, in 2023, the growth was sustained by domestic demand, including private consumption and private investment, providing crucial support and mitigating the contraction in exports.

Furthermore, Tan added that positive government policies, particularly focusing on investment, contributed to a revival in investment projects in public benefit corporations (PBC).

"This, in turn, is expected to bolster domestic demand on the demand side, impacting the construction services sector on the supply side. Consequently, the belief is that achieving a 4.5 per cent GDP growth in 2024 is highly feasible," he added.

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