In its monthly economic review for January 2024, the research house noted that the pick-up in growth will be supported by the external trade recovery, on top of the sustained growth in domestic spending.

“However, we are cautiously monitoring potential downside risks, such as escalation of geopolitical tensions, another round of supply (and global trade) disruptions, fluctuations in the commodity and financial markets, and the possibility of economic recession in the US, which could adversely affect Malaysia’s external demand and overall growth outlook.

“On the domestic front, we are closely monitoring the factors that could impact the price outlook, which may affect overall domestic spending activities,” it said.

Meanwhile, MIDF said it estimates that Malaysia’s economy grew at a modest pace of 3.4% year-on-year in the fourth quarter of 2023 (Q4 2023), only marginally higher than the 3.3% in the previous quarter.

“Despite the still modest gross domestic product (GDP) growth in Q4 2023, based on the trend in both leading index (LI) and coincident index (CI), we expect Malaysia’s economy will continue to grow, anchored by a sustained rise in domestic spending and also supported by the expected recovery in external demand.

“For the full year 2023, (based on the advanced estimate) Malaysia’s GDP growth moderated to (+3.8%), below our estimate due to weakness in external trade and manufacturing activities,” it said.

Overall, the research house said that the growth continued to be driven by a sustained rise in domestic demand.