The Federation of Malaysian Manufacturers (FMM) has expressed optimism about the nation’s economic prospects, anticipating a significant recovery driven by exports. According to FMM President Tan Sri Soh Thian Lai, key indicators such as the Purchasing Managers’ Index (PMI) suggest that manufacturing activities have bottomed out and are now set for a gradual rebound.
Soh highlighted the surge in intermediate imports as a precursor to an export recovery, further bolstered by the potential resurgence in tourism and an uptick in investment momentum.
“While the surge in intermediate imports foreshadows an export recovery, a tourism boom and a pick-up in investment momentum would add support.
“A better second half of 2024 is expected as global monetary conditions ease,” he said in a statement today.
He emphasised that the global monetary conditions are expected to improve in the second half of 2024, with central banks in developed markets likely to reduce interest rates.
As a result, Soh predicted a stronger ringgit exchange rate by the end of the year, obviating the need for currency pegging.
Moreover, Malaysia’s foreign reserves are deemed adequate, and the current account balance remains in surplus, providing further stability to the economy. However, FMM anticipates economic growth to hover at the lower end of the official forecast range of 4 to 5 percent in 2024.
Soh also noted that private consumption may decelerate, citing factors such as the recent hike in the service tax rate and the government’s subsidy rationalisation program.
These measures could potentially exert pressure on inflation and the overall cost of living, leading to more restrained consumer spending throughout the year.
Overall, FMM’s outlook underscores cautious optimism tempered by the challenges posed by inflationary pressures and evolving global economic conditions. Nevertheless, the anticipated recovery in exports and ongoing efforts to bolster domestic economic fundamentals are expected to underpin Malaysia’s economic resilience in the coming months.
