KUALA LUMPUR, Aug 21 — Kenanga Investment Bank Bhd has retained the 2023 current account (CA) forecast at 2.6 per cent of gross domestic product (GDP) despite weaker external trade performance and moderate GDP growth outlook.

In a note today, the research house said continued weakness in external trade amid a slowdown in the global economy led by the advanced economies due to a higher interest rate environment and a slower-than-expected recovery in China would likely lead to a narrower CA surplus in 2023.

"However, we expect the current account surplus to remain supported by a sustained recovery in the tourism sector due to a gradual increase in tourist arrivals and the expected return of foreign capital inflows,” it said.

It said the CA surplus of the balance of payments expanded to RM9.1 billion or 2.1 per cent of GDP in 2Q 2023 compared to RM4.3 billion or 1.0 per cent of GDP in 1Q 2023.

"The increase in the CA surplus was primarily attributed to a smaller deficit in services and primary account, while the goods account remained in surplus albeit lower.

"This was also due to the lower denominator, as nominal GDP fell 1.2 per cent year-on-year, its first contraction since 4Q 2020 (-1.1 per cent quarter-on-quarter; 1Q 2023: -5.0 per cent),” it said.

Additionally, Maybank Investment Bank Bhd said its full-year 2023 CA surplus projection as a percentage of GDP would remain at 2.4 per cent, but the CA surplus value is trimmed to RM43 billion from RM47 billion (1H 2023: RM13.4 billion or 1.5 per cent of GDP; 2022: RM55.1 billion or 3.1 per cent of GDP) following its revision in 2023 real GDP growth forecast to 4.0 per cent from 4.5 per cent.

Meanwhile, Public Investment Bank Bhd said Malaysia’s balance of payments (BOP) position remained negative in the second quarter of 2023 (2Q 2023) despite a widened CA surplus of RM9.1 billion from RM4.3 billion in 1Q 2023.

It said the services account registered a narrower deficit of RM11.3 billion in 2Q 2023 (-RM12.8 billion in 1Q 2023).

"Similarly, the financial account continued to contract by a larger amount of RM11.6 billion in 2Q 2023 from a net outflow of RM2.4 billion in 1Q 2023.

"The overall BOP recorded a deficit of RM12.4 billion in 2Q 2023 from a deficit of RM5.7 billion in 1Q 2023,” it added. — Bernama