ROSY OUTLOOK
LOCAL banking and manufacturing sectors are set for a good year after the strong April data, say economists. Loan growth accelerated 4.8 per cent year-on-year while exports rose 14 per cent to RM84.24 billion during the month.
THE manufacturing and banking sectors may be in for a rosy ride this year following the latest standout data on exports and loan growth, say economists.
April’s loan growth accelerated 4.8 per cent year-on-year (y-o-y), the highest since September last year, while the country’s exports rose 14 per cent to RM84.24 billion for the month, the second-highest results ever.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the country’s external sector had benefited from improving demand from abroad, particularly the doubledigit growth in the electrical and electronics (E&E) segment.
“The rise in crude oil prices also contributed positively to the overall export performance.
“This happened despite the US dollar/ringgit pair trading better than last year,” he told NST Business yesterday.
Afzanizam said foreign demand was very supportive and he anticipated the external sector to continue posing healthy trend in the last month’s performance.
MIDF Research chief economist Dr Kamaruddin Mohd
Nor said the strong momentum was expected to continue.
“A weakening ringgit helps the exporters but will not be a main factor driving demand,” he added.
FXTM global head of currency strategy and market research Jameel Ahmad said concerns that ongoing weakness in the manufacturing sector would risk weighing down on the country’s gross domestic product (GDP) prospects had subsided, following another impressive trade balance report for the economy.
“Exports surged by an annualised 14 per cent in April, which certainly helps provide positive momentum for the second-quarter GDP report.
“The Malaysian economy is expected to continue showing that it is growing beyond five per cent this year,” he said.
RHB Research economist Vincent Loo Yeong Hong said the higher April trade numbers indicated that trade volumes continued to be healthy while businesses resumed capital spending after a weak first quarter and despite concerns over the ongoing United States-China trade tensions.
“We expect exports to grow at a healthy pace of 6.5 per cent, albeit slowing from the 18.9 per cent recorded last year.
“This is on account of slightly weaker global trade outlook and a slowdown in demand from China for the country’s exports.
“However, this would be partly mitigated by sustained strength in global trade and resilient external demand for E&E shipments.
“The current account surplus of the balance of payments is expected to narrow slightly to RM39.3 billion, or two per cent of GDP this year, from three per cent of GDP last year.
“It will likely be driven by higher deficits in the services, income and transfers accounts,” said Loo in a report yesterday.
For the banking sec- tor, MIDF Research said the retail segment was expected to be the main driver for loan growth this year.
It has maintained its expectation of higher loan growth, based on the current trend in loan applications and approvals.
“We maintain our positive view on the banking sector’s performance this year. We believe the stable employment environment will drive loans growth.
“With higher demand and approval for loans, the banking sector will be able to maintain its earnings potential,” said MIDF Research.
The banking industry’s total loans grew at a faster pace in April 2018 to RM1.61 trillion y-o-y.
On a quarter-onquarter basis, it expanded 4.4 per cent on the back of a rebound in demand in March, after the decline seen in February. The level could indicate steady growth for the segment, which could also mean a continuous stable demand for housing and the associated financing, MIDF Research added.