Malaysia's distributive trade to benefit from July, Merdeka sales: CIMB
The firm said the measures include a one-off RM100 cash credit for all Malaysian adults and three per cent lower subsidised fuel prices, which are cumulatively forecast to add 0.12 percentage points to real gross domestic product (GDP).
Together with the recent 25 basis point cut in the overnight policy rate, these measures are anticipated to lift consumption in the September–December period.
"The recent 25 basis point cut in the overnight policy rate (OPR) is anticipated to benefit the M40 and T20 households, helping to mitigate potential headwinds from US reciprocal tariffs.
"The consumption-driven initiatives, concentrated in the September–December 2025 period, are expected to partly offset the hangover from front-loaded exports and tariff uncertainty. This should help to keep quarterly GDP growth above the 4.0 per cent level," it said.
CIMB Securities maintains its 2025 GDP growth forecast at 4.3 per cent, supported by reduced US tariffs on Malaysian goods from 25 per cent to 19 per cent and domestic consumption initiatives.
However, the firm said downside risks persist from the evolving trajectory of US trade policy, with its latest focus on semiconductors posing a significant threat to Malaysia's electrical and electronics (E&E) sector that represents about 6 per cent of GDP.
For the second quarter (Q2), the firm estimates GDP growth at 4.4 per cent, slightly below the advance estimate of 4.5 per cent and matching the pace of the previous quarter.
Distributive trade volume growth held steady at 4.3 per cent, while services growth eased to 5 per cent from 5.2 per cen. Industrial output slowed to 2 per cent from 2.3 per cent.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
32 minutes ago
- The Star
2Q GDP growth likely to miss estimates
PETALING JAYA: Gross domestic product (GDP) growth for the second quarter (2Q) is anticipated to come in slightly below the Statistics Department's advanced estimates of 4.5%, mainly dragged by challenges on the exports front. According to economists surveyed, domestic demand is poised to hold up with some government support and the recent overnight policy rate (OPR) cut amidst the more difficult external environment with uncertainties to international trade flows. While US tariffs with Malaysia and the Asean region have already been set, there are still other upside risks factors to the tariff rate especially, for Malaysia. Factors here include its close association with the BRICS partnership and the announced intent to migrate the semiconductor supply chain to the United States, to which US president Donald Trump had earlier plainly and clearly stated. Chief Economist at Ambank Group, Firdaos Rosli, said its initial projections for the 2Q GDP growth were initially in line with advance estimates of 4.5% but considering latest developments, this has been lowered to 4.3%. 'This is due to data points for the services sector, construction and trade – we think that growth will come in a bit lower than advanced estimates. 'We notice there has been resilient spending that continues to drive growth but the front loading effects due to US tariffs are starting to take the bite now. 'Front loading effects had dissipated quite drastically whereby in May and June the exports growth had recorded a contraction – this might continue in the coming months,' he told StarBiz. On the domestic front, Firdaos said demand is still holding up with loans growth relatively stable although there is some moderation in terms of loan applications. 'But loans growth among the small and medium enterprises (SMEs) are still high which indicates that the business community is still confident with the business environment in Malaysia relative to external challenges at the moment. 'We think domestic demand will still be resilient on government support and handouts such as the Program Sumbangan Tunai Rahmah and the RM100 cash assistance for all,' he noted. While there are some signs of moderation in the domestic front, this is anticipated to still hold up for now and is also supported by the lower OPR. 'The United States economy in the first half of this year has moderated and this has a strong correlation to Malaysia. 'As the US slows, so will Malaysia and this will probably feed in to the narrative in to the third and fourth quarter of this year. We are still holding on to full year GDP growth of 3.8%,' Firdaos said. 'It appears that 1Q will probably be the best performing quarter of this year, based on the present circumstances. 'Bank Negara Malaysia's projection is for GDP growth to be at 4% to 8%. If growth is 4.3% in 2Q that means growth in the second half will have to be at least higher than 3.6%,' he added. Socio-Economic Research Centre executive director and economist Lee Heng Guie said he anticipates 2Q GDP growth to come in at 4.4%, lower than advanced estimates. He said some key points that will influence this figure include the manufacturing sector which has slowed down, while mining continues to decline but the construction industry is still holding up with double digits growth. Meanwhile, Lee said the services sector is also being buoyed by growing tourism activities and their spending receipts as well. 'In the second half we will be watching the exports sector – due to the ongoing uncertainties from tariffs and I believe the actual impact due to the tariffs will be in 3Q. 'Exports will continue to be a drag unless it's a surprise, which is unlikely. The second half's GDP growth will hopefully come in at 3% to 4%. 'For the full year GDP forecast, I'm expecting it to be at 4%,' Lee told StarBiz. Bank Negara Malaysia had last month revised its GDP estimates lower and Lee says this could be why the OPR was preemptively cut. 'Next year, there will be the impact of the still delayed tariff between US and China and this effect will continue into the first half of next year. 'This is why it is crucial for the government to ensure that Budget 2026 will continue to hold up domestic demand spending as there are building risks in the exports sector,' Lee said. On Tuesday, the United States and China extended their tariff truce for another 90 days, which if they did not, would have resulted in triple-digit percentage duties that would have been imposed on each other's goods. 'The government should keep costs manageable for businesses – hopefully the soon-to-be-announced budget will give some tax concessions to ease the cost of doing business especially for the SMEs. 'Sentiment here for the second half will be cautious at best,' he added. Meanwhile, BIMB Securities Research anticipates GDP was likely to have expanded by 4.3% for the 2Q compared to 4.4% in 1Q. 'Demand-side indicators in 2Q were rather mixed. Private consumption, the key growth driver, is expected to have moderated, with retail sales growth easing to 5% from 6.8% in 1Q, the slowest pace in six quarters. 'The Index of Services also softened slightly to 5% from 5.2% in the previous quarter. Despite this moderation, labour market conditions remained firm, with the unemployment rate edging down to 3%, the lowest since April 2015,' BIMB Research said. It noted the absence of major festivals during the quarter, which when combined with fading effects from February's minimum wage hike and the civil servant salary adjustment, would have likely tempered consumption growth.
New Straits Times
2 hours ago
- New Straits Times
Malaysian businesses urged to tap Cambodian market
UALA LUMPUR: The Malaysia-Cambodia Business Association (MCBA) has called on Malaysian businesses to seize emerging opportunities in Cambodia following supply chain disruptions caused by the Cambodian-Thai border conflict. The MCBA said even though a ceasefire is in place, the transportation of certain Thai products has been disrupted, with supply chains in Cambodia slowing significantly or coming to a halt. "This has created new market opportunities for Malaysian businesses. Cambodia is currently experiencing a shortage of certain consumer goods, food products and industrial raw materials, and Malaysia holds clear advantages in terms of quality, pricing and supply stability," it said in a statement yesterday. The association said in situations like this, some Thai investors may choose to withdraw from the Cambodian market, presenting an entry opportunity for Malaysian enterprises. MCBA president Datuk Seri Ricky Yaw said Cambodia's market fundamentals remain strong with promising growth potential. "Malaysian enterprises, with their flexible supply chains, broad industry coverage and quick response capabilities, are well positioned to seize this window of opportunity and gain a competitive edge in the regional market."
The Star
4 hours ago
- The Star
DRG model still challenging for private healthcare
Unlike the conventional fee-for-service model, the DRG system sets a fixed price for treatments based on case complexity and industry benchmarks. PETALING JAYA: Malaysia's diagnosis related group (DRG) model to manage rising healthcare costs and allocate medical resources remains a challenge for implementation in private hospitals, analysts say. This is despite efforts to find solutions, including data collection. The issue is compounded by absence of a universal healthcare financing system in Malaysia. Unlike the conventional fee-for-service model, the DRG system sets a fixed price for treatments based on case complexity and industry benchmarks. According to Bank Negara data, medical inflation in the country reached 15% last year compared with the global average of 10% and the Asia Pacific average of 11%. For insurers, this becomes a problem as claims rose by 73% between 2021 and 2023 while premiums collected only increased by 21%. CIMB Research, who spoke to Association of Private Hospitals Malaysia (APHM) president Datuk Dr Kuljit Singh, said implementation of the DRG model in private hospitals could be challenging due to the absence of a universal healthcare financing framework and limited data availability despite efforts focused on generating and collecting data. The research house, quoting Kuljit, noted that no robust DRG models exist globally for private healthcare except in cases involving a single funder or universal healthcare financing. Public hospitals have all come under a mix of the DRG model and annual budgets to fund and provide for healthcare. 'Most countries use DRG in public healthcare to calculate costs and determine government budgets. In private settings, challenges emerge when patients face complications or require additional care beyond what the system covers,' the research house said, adding that the lack of data accuracy makes an effective rollout of the DRG model challenging for private hospitals. Despite the challenges, Kuljit shared that APHM-affiliated hospitals have been working closely with the Health Ministry and holding regular engagements to support an effective rollout of the DRG model. CIMB Research has maintained an 'overweight' stance on healthcare stocks, underpinned by the defensive nature of such stocks and the demand for private healthcare. Growth prospects remain supported by organic expansion, the rising prevalence of non-communicable diseases and an ageing population. IHH Healthcare Bhd remains the research house's top pick with a 'buy' call and target price of RM8.50. It has a 'hold' rating on KPJ Healthcare Bhd with a target price of RM2.90. 'Within our coverage, we believe KPJ is more exposed to risks from the possible implementation of DRG in Malaysia, given that 98.1% of its revenue for the first quarter for this year (1Q25) was derived locally. 'In comparison, we estimate Malaysian operations contributed only 18% to 21% of IHH's 1Q25 revenue,' the research house said. IHH has a presence across Malaysia, Singapore, Turkiye, Europe and India.
