Sen­ti­ment more pos­i­tive and ring­git value has im­proved, says econ­o­mist

New Straits Times - - Business -


KUALA LUMPUR ru­pa­banerji@me­di­aprima.com.my

MALAYSIA’S econ­omy is on the mend and likely grew be­tween 4.4 and 4.5 per cent in the first quar­ter of this year, says UOB Bank econ­o­mist Ju­lia Goh.

Al­ready, sen­ti­ments are be­com­ing more pos­i­tive while the ring­git has also caught up with some of the re­gional cur­ren­cies ver­sus the US dol­lar.

“In the near term, there will be (up­side) im­prove­ments in the gross do­mes­tic prod­uct (GDP) if ex­ports con­tinue to out­per­form as it did in the first three months of the year,” she told a me­dia brief­ing, here, yes­ter­day.

Against a back­drop of an im­prov­ing global econ­omy and broad-based de­mand, Malaysian econ­omy has bot­tomed out and growth is pick­ing up. Down­side risks could em­anate if com­mod­ity prices go south, she added.

For­eign sell­ing of bonds has abated and now there is buy­back of Malaysian Govern­ment Se­cu­ri­ties (MGS), which is a re­flec­tion of an im­prove­ment in for­eign sen­ti­ment.

In April, for­eign bond buy­ing to­talled RM6.8 bil­lion af­ter five months of sell­ing while MGS at­tracted a to­tal of RM5.7 bil­lion. Eq­ui­ties also saw a come­back of for­eign in­ter­est since early this year, pro­vid­ing the FTSE Bursa Malaysia KLCI a good run.

“The ring­git’s im­prove­ment was aided by the sell­ing abat­ing,” she said, adding that the ring­git was pro­jected to im­prove to RM4.30 against US dol­lar by year-end.

Although in­fla­tion­ary pres­sures spiked in re­cent months, Goh said the pres­sures were tran­sient in na­ture and would dip in the sec­ond half.

In terms of ring­git and re­gional cur­ren­cies out­look, she said there was room for fur­ther ap­pre­ci­a­tion although an­other risk of a stronger dol­lar might arise to­wards year-end.

On the out­look for the Overnight Pol­icy Rate, UOB ex­pects the rate to re­main un­changed for the rest of the year, mostly due to an im­prove­ment in the GDP num­bers.

The mon­e­tary pol­icy com­mit­tee will is­sue a state­ment on Fri­day.

Goh also pro­jected the cur­rent ac­count sur­plus to be be­tween 1.5 and two per cent this year.

Strong for­eign di­rect in­vest­ments an­nu­ally have helped buf­fer the balance of pay­ments and for­eign reserves de­spite the con­cerns about port­fo­lio cap­i­tal out­flows in the first quar­ter.

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