Economic growth to continue momentum between Aug to Oct

KUALA LUMPUR: Malaysia's economic growth is expected to continue its momentum to between August to October 2017.

In a statement yesterday, the Department of Statistics Malaysia said this is supported by the annual change of Leading Index (LI) and Coincident Index (CI) which remained favourable in April 2017.

“The annual change of LI, which monitors the economic performance in advance, increased 1.4 per cent in April,” it said.

However, the department noted that the month-to-month change of LI registered a decrease of 1.3 per cent to 117.3 points in the reference month, from 118.8 points previously.

“The main components which caused the decrease were real imports of other basic precious and other non-ferrous metal (0.6 per cent), number of housing units approved (-0.6 per cent) and number of new companies registered (-0.4 per cent),” it said.

Meanwhile, the annual change of CI, which measures current economic activity, continued to increase to 3.8 per cent in April as against 2.9 per cent in the previous month.

The annual change of LI, which monitors the economic performance in advance, increased 1.4 per cent in April. Department of Statistics Malaysia

On the contrary, the monthto-month change of CI showed a decrease of 0.2 per cent in the reference month, due to the decrease in retail trade volume index (-0.5 per cent) and industrial production index (-0.1 per cent).

Meanwhile, RAM Rating Services Bhd has revised Malaysia's gross domestic product (GDP) growth upwards to 5.2 per cent this year, from an initial expectation of 4.5 per cent.

In a statement, the rating agency said the revision was made after a better-than-expected growth performance of 5.6 per cent in the first quarter, as the economic recovery momentum was beginning to show signs of sustainability.

“Most of this upside stems from a positive turnaround in business sentiment, which has brought about more productive capacity building in the form of machinery and equipment investments,” it said.

It added that a significant rebound in external demand had also supported the robust growth and, in part, was a key driver of higher business confidence exhibited by export-oriented firms, in line with RAM's Business Confidence Index findings.

Meanwhile, RAM Rating Services also increased its inflation expectation for this year to 3.8 per cent from 3.0 per cent originally, on the back of a stronger-than-expected oil price recovery momentum in the first quarter and upward stickiness of food prices, especially food away from home.

“Although the current upward price momentum is still primarily cost-push driven, the acceleration in growth momentum indicates a stronger potential for a higher prevalence of demand-pull inflation, moving forward,” it said.

It added that there was a higher possibility of a 25 basis points hike in the overnight policy rate towards the end of the year. — Bernama