KUALA LUMPUR, May 26 ― Research firms expect Malaysia's gross domestic product (GDP) growth for 2014 to be above five per cent, after moderating to 4.7 per cent in 2013.

In a note today, RHB Research said economic activities would likely improve at a more moderate pace in the months ahead, following the weakening growth in the Leading Index (LI). 

Malaysia's LI, which monitors the anticipation of the overall economic activity in the months ahead, fell to 115.2 points in March, a contraction of 0.7 per cent from the preceding month.

The contraction was largely led by declines seen in the number of housing units approved, real imports of semi conductors and number of new companies registered.

The Coincident Index (CI) ― an index tracking current economic activity ― was down 1.2 per cent during the month, due to a sharper fall in capacity utilisation (-0.6 per cent) and volume index of retail trade (-0.5 per cent).

Consequently, the year-on-year increase in the CI had moderated to +1.1 per cent, from +3.6 per cent seen in the previous month.

“As a whole, we expect real GDP to expand at a faster rate of 5.4 per cent in 2014,” said RHB Research.

It added economic growth would likely be supported by continued recovery  in exports, on account of stronger demand from developed countries as well as  resilient domestic demand on sustained increase in private investment.

Upward adjustment in administrative prices and the central bank's moves to rein in household debt would likely hurt consumer sentiment somewhat and consumer spending would likely remain resilient, said RHB Research.  

Meanwhile, AllianceDBS Research maintained its 2014 GDP forecast at five per cent, with an expectation of moderation in the coming quarters.     

“Upon further release of additional economic data over the next couple of months, we will be able to further determine the actual strength of the economy,” it said in a research note today.

Potentially, a major downside risk would likely emanate from the global economic performance, it added.

“In particular, while the economic recovery in the Eurozone has been picking up pace in the past few months, the recent crisis in Ukraine could derail all the positive progresses,” said AllianceDBS. ― Bernama