Maybank IB trims GDP forecast to 5.1pc this year
KUALA LUMPUR: Malaysia’s nearterm growth outlook is fluid as domestic political events add to external developments, said Maybank Investment Bank (Maybank IB) in its latest report.
The research firm trimmed this year ’s gross domestic product (GDP) growth forecast to 5.1 per cent from 5.3 per cent previously, taking into consideration the year-to-date data and the impact of measures announced by the government.
“We see growth moderating further to 4.9 per cent next year given the outlook of slower global economic growth that will affect Malaysia’s external trade growth performance, as well as the implications of new government policies on the dynamics of domestic demand growth.”
Maybank IB also revised down its year-end target for FTSE Bursa Malaysia KLCI to 1,750 points from 1,840 previously, and expected range-bound trading for the second half of this year as well as optimism from the 2019 Budget to drive the key index higher in the last two months.
“Thematics will centre around regulatory risk and growth. Our observation is the government is strongly committed to strengthening its finances and stepping up on governance, accountability and transparency; we expect this to lift investors’ confidence over time.”
It said consumer spending would be a key driver of growth this year and next year. It also maintained its May upgrade of consumer spending growth forecast to 7.3 per cent.
The forecast reflects additional boost to disposable income and purchasing power from the implementation of consumerfriendly measures such as the zero-rated Goods and Services Tax and the fuel price subsidy.
“We anticipate a change in the current ‘blanket’ fuel price subsidy to a ‘targeted’ system next year.
“We see prudent government spending growth to maintain fiscal discipline via sub-three per cent budget deficit to GDP ratio.
“Investment growth will be subdued mainly due to the impact of the reviews and cancellation of major infrastructure projects.”
Meanwhile, Maybank IB does not expect any change in the Overnight Policy Rate of 3.25 per cent until the end of next year as it expects Bank Negara Malaysia’s monetary policy bias to lean towards supporting growth.