MIDF Research: Malaysia’s economy to grow 4.9pc

KUALA LUMPUR: Malaysia’s economy is expected to post 4.9 per cent year-on-year (y-o-y) growth this year, given the upbeat performance of domestic and external trade sectors, says MIDF Research.

In its report “Malaysia Equity Research: Q2 2019 Outlook”, it said the domestic economy continued to be resilient, with Bank Negara Malaysia likely to maintain the Overnight Policy Rate at 3.25 per cent this year.

It added that the headline inflation was expected to average 2.2 per cent this year compared to one per cent last year.

“Inflationary pressure remains benign as the core inflation rate is expected to remain steady this year.”

On the ringgit, it expected the local currency to hit 4.00 against the US dollar by year-end, supported by ongoing current account surplus.

Malaysia’s trade surplus widened to RM11.5 billion in January from RM10.7 billion in December last year, as exports growth outperformed imports.

“We foresee geopolitical events to cast a shadow on investors’ sentiment. But we still expect corporate Malaysia to post decent earnings growth.

“Therefore, we reiterate our year-end FTSE Bursa Malaysia KLCI (FBM KLCI) baseline target of 1,800 points,” said MIDF Research.

It said Malaysia’s positive growth momentum would continue as risks were expected to subside due to clarity in domestic policy direction, as seen from the mid-term review of 11th Malaysia Plan and 2019 Budget.

MIDF Research said growth would be influenced by factors such as global trade and financial stability, protectionism threat and geopolitical risks, among others.

For the full year 2018, Malaysia’s economy expanded 4.8 per cent on improved external trade, strong industrial activities and sustained solid domestic demand.

“We opine the solid GDP growth was mainly due to receding United States-China trade war effects and modest recovery in the mining sector, especially crude petroleum and liquefied natural gas.”