GROWTH FORECAST REVISED DOWN TO 5PC
It is mainly due to external factors, cancellation of mega projects
BANK Negara Malaysia has revised the economic growth forecast to five per cent for this year from the previous target of 5.5 to six per cent, mainly due to external factors and cancellation of mega projects.
Bank Negara Governor Datuk Nor Shamsiah Mohd Yunus, however, said the economy was expected to remain on a steady growth path and would continue to be one of the fastest growing economies in the region.
The growth would be supported by strong business and consumer sentiments, strong consumer spending due to the tax holiday from June to this month, and expansion in manufacturing production capacity, she said.
“Malaysia’s macroeconomic fundamentals remain strong, with broad-based sources of growth, diversified export market and product, positive labour market conditions, as well as conducive investment destination for foreign investors,” she said yesterday.
She said factors constraining growth would be the trade tension between the United States and China, suggesting that additional tariffs with small trading economies like Malaysia, as well as the cancellation of mega projects would reduce the total government expenditure into the economy.
Malaysia’s economy grew at a slower pace year-on-year by 4.5 per cent in the second quarter of this year, a level not seen since the fourth quarter of 2016, mainly due to lower support from net exports and contracted public investment.
The growth, which fell below a consensus estimate of 5.4 per cent, was mainly driven by consumer spending that grew at its highest level since before the Goods and Services Tax.
Nor Shamsiah said private sector activity continued to be the primary driver of growth as both private consumption and investment expanded strongly during the quarter.