KUALA LUMPUR: Kenanga Investment Bank Bhd has maintained its forecast for Malaysia's gross domestic product growth at 5.0 per cent for 2024 and expects it to moderate to 4.8 per cent in 2025.

The investment bank said the expectation is aligned with the Department of Statistics Malaysia's (DoSM) projection for the third quarter of this year (3Q 2024).

"We anticipate growth to slow further in the final quarter to around 4.6 per cent, as growth momentum typically eases on a quarter-to-quarter basis. The growth outlook remains vulnerable to external factors, including potential slowdown in advanced economies due to the lag effects of higher interest rates," it said in a note today.

Kenanga also highlighted that heightened geopolitical tensions in the Middle East and Eastern Europe also pose a risk, disrupting the global supply chain.

"Malaysia's exports remain fragile, heavily dependent on China's recovery and the US economic performance. The expected ringgit appreciation against the US dollar could reduce export receipts, especially from the US," it added.

It further said that this is evident in September's export data, where total exports fell by 0.3 per cent down from a 12.0 per cent rise in August, far below market expectations.

Notably, exports to the US slowed sharply to 9.1 per cent (August: 45.4 per cent) as the ringgit appreciated by about 9.0 per cent year-on-year, averaging RM4.26 in September (September 2023: RM4.68).

"Overall, domestic demand remains the key growth driver, supported by a stable labour market, rising tourist arrivals, and ongoing realisation of approved investment. While we are cautious on the export outlook, we expect tech-related segments in the manufacturing sector to benefit from the global tech cycle," Kenanga said.

DoSM previously reported that advance estimates indicate that Malaysia's economy grew by 5.3 per cent in the 3Q 2024, following a robust 5.9 per cent growth in the preceding quarter.

In its release of advanced GDP, the department noted that the economy grew by 5.1 per cent for January to September 2024, compared to 3.8 per cent in the same period last year.