ʻMALAYSIA'S ECON­OMY GREW FASTER THAN EX­PECTED IN Q2’

HLIB ex­pects full-year growth fore­cast of 5.4pc

New Straits Times - - Front Page -

RUPA DAMODARAN KUALA LUMPUR bt@me­di­aprima.com.my

ECO­NOMIC ac­tiv­i­ties in the sec­ond quar­ter of the year have ramped up at a faster pace than mar­ket ex­pec­ta­tions, promis­ing a brighter eco­nomic out­look for the first half of the year.

In­vest­ment banks and re­search houses such as Hong Leong In­vest­ment Bank (HLIB) ex­pect the sec­ond quar­ter to have grown 5.8 per cent, from the ro­bust 5.6 per cent in the first quar­ter.

HLIB has also raised its ful­lyear growth fore­cast to 5.4 per cent.

Stronger in­dus­trial out­put due to higher man­u­fac­tur­ing ac­tiv­i­ties and ser­vices sec­tor growth of seven per cent be­tween April and June has also raised the growth mo­men­tum go­ing into the sec­ond half of the year.

Af­fin Hwang Cap­i­tal Re­search said healthy trade ac­tiv­i­ties and strong man­u­fac­tur­ing out­put would have en­sured the econ­omy to grow at a steady 5.2 per cent pace dur­ing the sec­ond quar­ter.

To Sin­ga­pore-based No­mura Re­search, the re­silience of In­dus­trial Pro­duc­tion In­dex (IPI) growth con­trasts with the sharp slow­down in June ex­port growth and other ac­tiv­ity data like crude palm oil pro­duc­tion.

“The up­side sur­prise came from min­ing IPI growth and this may not be sus­tained in the com­ing months,” said the firm.

Min­ing out­put turned around from a 2.3 per cent con­trac­tion to 2.4 per cent growth in June, due to higher pro­duc­tion of crude oil and natural gas.

MIDF Re­search ex­pects the en­cour­ag­ing trend of the IPI — which tracks the man­u­fac­tur­ing, min­ing and elec­tric­ity sub-sec­tors — to con­tinue for the up­com­ing months.

“Due to strong ex­port per­for­mance for the first half of this year and op­ti­mistic busi­ness con­fi­dence, we be­lieve the up­beat mo­men­tum will re­main and thus caus­ing pos­i­tive spillover ef­fects to Malaysia’s in­dus­trial pro­duc­tion this year,” it said.

Based on the solid up­trend in trade ac­tiv­i­ties and steady do­mes­tic con­sump­tion, MIDF Re­search ex­pects in­dus­trial pro­duc­tion growth to hit 5.3 per cent this year.

HLIB and Af­fin Hwang, nev­er­the­less, pre­fer to be a bit cau­tious about the over­all growth in the sec­ond half.

“While we ex­pect neart­erm growth im­pe­tus to re­main re­silient, our fore­cast tra­jec­tory for a more mod­er­ate sec­ond half is re­tained as the base ef­fect (com­mod­ity sec­tor) and ex­u­ber­ance (ex­ports and cap­i­tal mar­ket ac­tiv­ity) wear off,” said HLIB.

Af­fin Hwang said the more mod­er­ate growth en­vis­aged for the sec­ond half was mainly due to the higher base ef­fect in the cor­re­spond­ing pe­riod of last year.

“How­ever, we ex­pect growth in do­mes­tic de­mand, es­pe­cially pri­vate con­sump­tion, to re­main sup­port­ive of eco­nomic growth, backed by sus­tained in­come growth, favourable labour mar­ket con­di­tions as well as higher num­ber of tourist ar­rivals to Malaysia in the sec­ond half.”

Ac­cord­ing to Tourism Malaysia, tourist re­ceipts are ex­pected to rise to RM118 bil­lion this year com­pared with RM82.1 bil­lion last year, with the num­bers to in­crease to 31.8 mil­lion, from 26.76 mil­lion last year, due to the 2017 SEA and Para Asean Games this month and in Septem­ber.

PIC BY YAZIT RAZALI

Tourism Malaysia says tourist re­ceipts are ex­pected to rise to RM118 bil­lion this year com­pared with RM82.1 bil­lion last year, with the num­bers to rise to 31.8 mil­lion due to the 2017 SEA and Para Asean Games this month and in Septem­ber.

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