KUALA LUMPUR, Jan 12 — Maybank Investment Bank (Maybank IB) said today it sees Malaysia’s economic growth improving to a rate of 4.4 per cent this year from an estimated 3.9 per cent in 2023 on the back of resilient consumer spending, sustained investments and recoveries in trade-related services and manufacturing industries like tourism and electronics.

Private consumption is estimated to grow by 5.1 per cent from 4.9 per cent in 2023 buoyed by an expanding labour market and improved wages. High tourist arrivals are also expected to bolster consumer spending, said Suhaimi Ilias, its chief economist in a presentation here.

Tourist arrivals in the first nine months of 2023 rose to 14.5 million from 10 million the previous year although still less than half of arrivals at the pre-pandemic levels. Travel receipts rose to RM6 billion within the same period, up by RM2 billion.

Meanwhile, public spending is expected to expand by nearly a full 100 basis points to 4.1 per cent as the government spends on more cash handouts and infrastructure projects.

Additionally, the bank said businesses should expect a positive domestic investment momentum as the Anwar government is set to execute its key economic agenda as outlined by the major blueprints and roadmaps announced last year.

This includes the New Industrial Masterplan (NIMP), which aims to drive manufacturing value up to an estimated RM560 billion by 2030, and the Madani Economic Framework. Prime Minister Datuk Seri Anwar Ibrahim said these plans will launch Malaysia’s "transition” to a rich economy.

Maybank IB said the ringgit could improve by this year, moving up to RM4.20 against the greenback as investors may look to capitalise on the NIMP and the reform-centred Madani Economic Framework, which could bolster confidence and investing appetite.

Ringgit is the region’s worst performer to date, sliding to as low as RM4.80 versus the dollar in October last year but that could improve as expectations mount that the Federal Reserve could begin tapering the benchmark rate with US inflation data showing some signs of cooling off.

Maybank IB said a Fed rate cut and a stable overnight policy rate would be a positive for the ringgit. The bank forecasts the Overnight Policy Rate to climb and stay at 3 per cent this year.