Msia’s Leading Index signals strong economic momentum

PETALING JAYA:
The continued rise in Malaysia’s Leading Index (LI) indicates that positive momentum in the country’s economy is likely to persist in the second half of 2024 (H2 2024), said MIDF Research.

This supports our recent upward revision of the 2024 gross domestic product (GDP) growth forecast to 5% as we foresee the national economic growth will continue to be supported by growing domestic spending and recovery in external trade activity,
it said in a statement.

Malaysia’s LI, a tool utilised for predicting economic trends for an average of four to six months ahead, showed an increase of 3.5% year-on-year (y-o-y) in June 2024, slightly below the 3.8% growth recorded in May 2024, marking the seventh consecutive month of expansion.
This growth was largely driven by a rise in the Bursa Malaysia Industrial Index.

However, the LI declined by 0.7% month-on-month (m-o-m) in June, the second consecutive monthly contraction, due to declines across all LI components from May 2024, except for the Bursa Malaysia Industrial Index and real money supply, M1,
it said.
Meanwhile, the Coincident Index (CI) accelerated by 2.6% y-o-y in June 2024, primarily due to an 8.5% y-o-y increase in real contributions to EPF and a 6.4% y-o-y rise in the volume index of retail trade.

The CI also recorded a 0.2% m-o-m increase, with all components contributing positively except for capacity utilisation in the manufacturing sector,
the research firm added.
The statistics department said the LI measures the anticipation of the overall economic activity in the months ahead.

The LI broadly tells us where the economy is going, and the CI tells us where the economy is now,
it said.