‘PLEASANTLY SURPRISING 4.7PC GROWTH’
Good numbers reported across board, albeit challenging local and global scenarios
ECONOMISTS were pleasantly surprised with Malaysia’s 4.7 per cent gross domestic product (GDP) growth last year, despite it being an economically and politically challenging year.
Economist Associate Professor Dr Aimi Zulhazmi Abdul Rashid said the growth was surprising as the drop in oil prices had affected Malaysia’s revenue.
“Surprisingly good numbers were reported across the board, albeit the challenging global economic scenario, especially the drop in oil prices and the weakening of the ringgit versus major currencies,” he said.
Aimi, who is also Universiti Kuala Lumpur’s strategic project director, said it was too soon to tell whether the solid expansion figures can be sustained this year.
He said the outlook for this year was still unclear due to issues, such as the United States-China trade war, eurozone financial trouble, Brexit and the US Federal Reserve interest rates hikes.
“Nonetheless, a stronger ringgit and rising oil prices augur well for the country.
“The economic catalyst for this year will be the private sector as the government is still mending the debt amount and restructuring the country’s financials.”
He added that the RM30 billion reimbursement from the Goods and Services Tax would be an important stimulus to the economy.
Standard Chartered Bank (StanChart) said the fourth-quarter GDP growth came in better than expected on the back of sustained private consumption strength.
This should reduce market expectations of an interest rate cut by Bank Negara Malaysia, it added.
StanChart expects growth headwinds this year as consumer spending, the main driver of growth last year, faces a high base effect, still-elevated household leverage and a slowing property market.
“But two one-off factors may help — tax refunds for goods and services and income, and a rebound in mining activity,” said the bank.
Meanwhile, Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid expects GDP to be moderate this year.
“Last year’s growth of 4.7 per cent is slower than 5.9 per cent in 2017. We expect the GDP growth to moderate further this year to 4.5 per cent, driven by normalisation in household spending, after expanding at abovetrend levels in 2017 and 2018,” he said.
Afzanizam is concerned about property overhang.
“The lingering property overhang, be it residential and nonresidential, would have an impact on the construction sector and other domestic-oriented industries such as manufacturing and services.
“We expect the government would speed up its development expenditure, especially in areas relating to infrastructure,” he said.
“The development expenditure for this year is expected at RM54.7 billion, which is higher than the 2010-2017 average of RM44.4 billion. This would provide the right catalyst and confidence for domestic demand,” he added.