Domestic demand among factors to lead GDP growth


SERC executive director Lee Heng Guie (second from right) and his team at the media briefing.
KUALA LUMPUR: Recovery in exports, growth in domestic demand and increased development spending will underpin economic growth for Malaysia in 2024.
These three factors should help the economy chalk up a 4.5% growth this year up from 4% in 2023, according to Socio-Economic Research Centre (SERC) executive director Lee Heng Guie.
“Among the key drivers of the economy are the services, manufacturing and construction sectors,” he said at an SERC media briefing session today.
Lee said domestic demand will contribute 4.3% to gross domestic product (GDP) growth while exports of goods and services will contribute 1.4%, adding that both fiscal and monetary policies would remain supportive of the economy.
He added that the budgetary operations under Budget 2024 are expected to provide moderate fiscal support to the economy through a development expenditure allocation of RM90 billion.
He expects the fiscal deficit to reach RM85.4 billion, accounting for 4.3% of GDP in 2024 compared with RM93.2 billion or 5% of GDP in 2023.
Lee expressed hope that Bank Negara Malaysia (BNM) will keep the overnight policy rate (OPR) steady at 3% through 2024 amid upside risks to inflation as the government contemplates revising subsidies and price controls.
Global economic outlook
At the global level, Lee said, while China’s economic growth fell short of expectations, dragged down by the malaise in the real estate sector, the US economy remained resilient.
However, he expects global economic growth to ease to 2.7% in 2024 compared with an estimated 3% in 2023 as weakening economic data and the lag impact of higher interest rates are fully felt in some advanced economies.
“We must always keep watch on the US economy and how China’s real estate is performing, as well as the geopolitical tension like the Ukraine-Russia war as they can affect the global economy,” he added.
Johor-Singapore Special Economic Zone
Lee noted that there was mixed reaction to the proposal for the Johor-Singapore Special Economic Zone (JS-SEZ) but he attributed it to a lack of information.
He said the Joint Ministerial Committee for Iskandar Malaysia (JMCIM) will carry out a feasibility study to identify the JS-SEZ focus in the areas of investor interest, businesses and market demand.
“We expect the JS-SEZ to bolster trade and investment and people-to-people connectivity as well as foster a strong, sustainable and mutually beneficial partnership between Malaysia and Singapore,” he added.
On Oct 30 last year, Prime Minister Anwar Ibrahim and his Singapore counterpart Lee Hsien Loong announced the establishment of a special task force under the JMCIM to conduct a study on the JS-SEZ.
Economy minister Rafizi Ramli and Singapore’s trade and industry minister Gan Kim Yong signed a memorandum of understanding today to formalise the cooperation between the two countries on the JS-SEZ.
The JS-SEZ is aimed at attracting domestic and foreign investments, enhancing cross-border flow of goods and people, as well as strengthening the business ecosystem in both countries.

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