CIMB SEES 4.6PC GROWTH NEXT YEAR
Country’s economy expected to be driven by private consumption and investment
CIMB Investment Bank Bhd is projecting gross domestic product (GDP) growth of 4.6 per cent next year, to be driven by private consumption and investment.
Treasury and markets group head Chu Kok Wei said the conservative projection is mainly due to the short-term external volatility, in particular the United States-China trade war.
“Where the financial market looks to is the follow-through of policy changes that were announced (by the government). Those will be a lot more medium term.
“We (Malaysia) are rather an open economy. So, the elephant in the room is what is happening between China and the US. This can cause short-term volatility, affect GDP numbers and economic growth,” he said on the sidelines of “Malaysia: A New Dawn 2018” investors’ conference, here, on Tuesday.
He said more importantly, what the government should do in the medium term is to ensure that policies and reforms are followed through. It should also stick to fiscal consolidation, and structural reforms in the education and labour market.
For this year, Chu said the bank has projected a 4.9 per cent expansion in GDP.
On banking, Chu said CIMB is seeing an improvement in corporate loan growth in the third quarter of this year as the government provides more clarity on its policies.
He said in the second quarter, businesses took a “wait-and-see” stance on major decisions, such as capacity expansion, especially after the 14th General Election.
“We do see corporate financing activities picking up after a slowdown in the second quarter. The policy direction helps, partly.
“Quite a fair bit of it are activities in regard to replacement of manufacturing capacity, plants and machineries.”
He said CIMB is also seeing more activities in the oil and gas segment but these are affected by the volatility in the oil price.
Chu said the bank is positive on Finance Minister Lim Guan Eng’s remark that the government is reducing direct participation in the equity ownership of companies so that the private sector can take the lead.
“As indicated by the finance minister, there should be a decline in government activities in the economy and I think the government wants to stick to the plan that it should be led by the private sector.
“Most activities should be driven by the private sector which can then go to the government for the right policies and conducive environment,” he added.