Two investment banks have maintained their projections for Malaysia's economic growth above 5% for 2024, citing a favourable domestic economic environment and a rebound in external demand.

Hong Leong Investment Bank Bhd (HLIB) has upheld its GDP growth forecast at 5% for 2024, driven by an improving labour market and domestic policies that are anticipated to support continued consumer spending.

HLIB noted that Malaysia's labour market is expected to remain stable throughout the year, supported by rising tourism activities, growth in exports, and employment initiatives from various national master plans. 

In July, the labour market saw continued improvement, bolstered by positive economic growth and stronger export performance, Free Malaysia Today reports.

“The decline in the number of unemployed persons accelerated on a month-on-month basis (-0.3%; June: -0.1%) but slightly moderated on a year-on-year basis (-2.7%; June: -2.8%),” HLIB said in a research note.

“The unemployment rate remained steady at 3.3% (June: 3.3%).”

Moreover, the labour force grew steadily, with a 0.1% month-on-month increase and a 1.7% year-on-year rise, indicating sustained confidence in the job market and the broader economy.

Consequently, the labour force participation rate remained stable at 70.4%.

In addition, CIMB Research has maintained its GDP growth forecast at 5.2% for 2024, driven by anticipated recovery in external demand linked to the global tech upcycle. 

The projection also reflects strong domestic spending, bolstered by robust investments and resilient consumer spending expected in the second half of the year.

CIMB went on to say that July's 5.5% year-on-year growth in distributive trade volume, up from 4.9% in Q2 2024, suggests a positive outlook for service activities in early Q3 2024. 

The rise in tourist arrivals and receipts in H1 2024, showing a 28.9% increase (+50.8% year-on-year), along with strong motor vehicle sales growth of 7.2% during the same period, is expected to bolster the services sector in the latter half of 2024.

This supports CIMB Research's 2024 services sector growth estimate of 5.5%.