‘Economic growth on upward trajectory’

KUALA LUMPUR: Malaysia’s economic growth is clearly on an upward trajectory, economists said, as fourth quarter 2017 gross domestic product (GDP) growth of 5.9 per cent surpassed market consensus of 5.8 per cent.

United Overseas Bank (Malaysia) Bhd economist Julia Goh said the pace of growth remained robust as domestic drivers provided steady support amid positive spillovers from external sectors.

“With growth accelerating to a three-year high of 5.9 per cent last year, the high base effect would weigh on this year’s growth. We continue to see positive developments across several domestic demand drivers that should keep Malaysia’s overall growth at 5 per cent this year,” she said.

“The growth is above expectation. Both the external and domestic engines are propelling growth,” Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said.

He said private consumption continued to grow and the expectation was for growth momentum to remain resilient.

“The overnight policy rate hike will ensure economic growth continues at a sustainable pace.”

Goh said new drivers of growth, including e-commerce and technology, as well as improving infrastructure, would help drive growth prospects.

She added that downside risks should not be understated as rising United States interest rates could lead to sustained sell-offs in emerging markets, which could dent confidence and growth.

On the ringgit, Goh said the local currency had strengthened against the US Dollar but continued to lag behind other neighbouring currencies on an effective exchange rate basis. The ringgit remains undervalued and still has room to appreciate.