‘Steady economic recovery towards Q2’

KUALA LUMPUR: Malaysia is expected to post steady economic recovery towards the second quarter (Q2) of the year, said MIDF Research.

This is amid the gradual pick-up in commodity prices, strong domestic demand and receding trade war effects.

For the first quarter (Q1), MIDF Research expects the economy to grow modestly based on the latest leading index.

“We expect tepid economic growth in the Q1 with slight recovery in the second quarter. This is in tandem with the pessimistic trend reflected by the Nikkei Manufacturing PMI for Malaysia, registering below 50 points for five consecutive months since October last year,” it said. The firm said the expected modest growth was mainly due to uncertainties over trade negotiations between the United States and China.

It, however, noted that Brent crude oil price had improved steadily since January at an average of US$60.5 per barrel (RM246.23) and latest last month at US$66.1 per barrel.

“Global demand is expected to recover, particularly if the US and China strike a trade deal,” it added.

On the local front, full employment conditions and shallow inflationary pressures were key supporting factors of the domestic demand, said MIDF Research.

“More deals linked to government-related infrastructure projects would engender positive sentiments in aiding the economic growth.”

MIDF Research said Malaysia will remain in deflation. However, this will be supported by a strong labour market, with labour force expanding 2.1 per cent year-onyear to 15.5 million in January.

“Malaysia’s consumer inflation is likely to stay low following the lower capped prices of RON95 and diesel at RM2.08 and RM2.18 per litre, respectively. Nevertheless, demand-push factor remained firm amid stable job market and steady wage growth,” it added.

More deals linked to government infrastructure projects would engender positive sentiments in aiding the economic growth.” MIDF RESEARCH