Malaysia’s Leading Index Continues Upward Trend in June 2024

Malaysia’s Leading Index (LI) recorded a further year-on-year increase of +3.5% in June 2024, following a +3.8% rise in May 2024. This marks the seventh consecutive month of growth, largely fueled by the performance of the Bursa Malaysia Industrial Index.

However, the LI experienced a month-on-month decline of -0.7% in June, following a -0.5% decrease in May.

“The drop was driven by contractions across nearly all LI components, except for the Bursa Malaysia Industrial Index, which rose by +0.4%, and the real money supply (M1), which saw a modest increase of +0.2%,” says MIDF.

Coincident Index Sees Faster Growth

The Coincident Index (CI), a key measure of current economic activity, grew at a faster pace of +2.6% year-on-year in June 2024, up from +2.2% in May.

This acceleration was primarily driven by an +8.5% rise in real contributions to the Employees Provident Fund (EPF) and a +6.4% increase in the volume index of retail trade.

On a monthly basis, the CI also improved by +0.2%, with positive contributions from all components except for capacity utilization in the manufacturing sector, which dipped by -0.3%.

Economic Outlook for 2H 2024

The sustained rise in the Leading Index suggests that Malaysia’s economic momentum is likely to continue into the second half of 2024.

This aligns with recent upward revisions in the country’s GDP growth forecast for 2024 to 5.0%, up from 3.6% in 2023. The growth is expected to be supported by increasing domestic spending and a recovery in external trade activity.

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