“We see a pick-up in the private investments in services and manufacturing sectors in the second half of 2018 ...”

DR YEAH KIM LENG, Sunway University Business School

KUALA LUMPUR: Malaysia will continue to leverage the improving private investment trend, backed by the positive sentiment and the new government’s clear direction of the economy and supportive policies.

Sunway University Business School economics professor Dr Yeah Kim Leng said Bank Negara Malaysia’s downward revision of gross domestic product (GDP) growth this year was reflective of the recent reduction in government spending.

However, he said the situation had been offset by an increase in private sector spending and demand, as well as moderation in external demand due to global trade tension and tightening of the global liquidity.

“We see a pickup in private investments in services and manufacturing sectors in the secondhalf (H2), and this will provide support for the economy and maintain at least five per cent full-year growth,” he said.

Yeah said the growth momentum remained stable largely in the services and manufacturing sectors, and the global economy was expected to achieve a modest growth of up to 3.9 per cent this year.

Yeah added that household spending would likely be sustained in H2 due to lower tax burden due to abolition of the Goods and Services Tax.

The Malaysian Institute of Economic Research executive director Professor Emir Dr Zakariah Abdul Rashid said the GDP revision indicated slowdown in the economy. “But we have yet to ascertain what will happen in H2 in the global and domestic economy. The previous forecast of up to six per cent GDP were too high,” he added.

He lauded Bank Negara’s GDP revision, citing the country should be aware of its development and global growth.

FXTM global head of currency strategy and market research, Jameel Ahmad said expectations for the second-quarter GDP reading were above five per cent, but the headline number of 4.5 per cent was far below forecast.

MIDF Research chief economist Dr Kamaruddin Mohd Nor said the lowering of the GDP target reflects the reality of things going forward.