Malaysia’s Leading index fell marginally by -0.2%yoy in Nov-23 the 9th straight month of contraction. Decreases in approved housing units and real imports of semiconductors were limited by continued growth in Bursa Malaysia Industrial Index, which remained positive since May-23. From month-on-month perspective, LI rose by +0.5%mom, the first monthly increase after 2 months of contraction, underpinned mainly by higher real imports of semiconductors.
For the Coincident Index (CI), the index increased further by +2.6%yoy, expanding for the 27th straight month. The stronger CI growth of +2.8%yoy in the 2 months to Nov-23 was also reflected in the slight strengthening of GDP growth in 4QCY23, according to advance estimate. Continued CI growth was due to increases in all components, especially real EPF contributions. Compared to Oct-23, the CI declined by -0.3% mom, the first drop in 5 months dragged down by all components except real salaries & wages in the manufacturing sector. Despite the still modest GDP growth in 4QCY23, based on the trend in both LI and CI, MIDF says it expects 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
Given the relatively marginal fall in LI in Oct-23 and Nov2023 which still pointed to improving growth momentum in the short run, MIDF said it is keeping projection that Malaysia’s economy will grow stronger at +4.7% this year. The pick-up in growth it said will be supported by the external trade recovery, on top of the sustained growth in domestic spending.
However, the house also clarified it is cautiously monitoring potential downside risks, such as escalation of geo-political 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, the house is closely monitoring the factors that could impact the price outlook, which may effect overall domestic spending activities.
