MIDF Research revises GDP forecast on current dev’t

KOTA KINABALU: Malaysia’s economy has been predicted by the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) to expand by 5.2 per cent this year, based on the current developments and indicators.

MIDF Research had revised its gross domestic product (GDP) forecast from 5.5 per cent to 5.2 per cent for 2018.

“Based on the current developments and indicators, we predict Malaysia’s economy to expand by 5.2 per cent this year given the upbeat performance of domestic and external trade sectors.

“Besides, supportive economic policies, stable labour market, continued wage growth and moderating inflation will support and spur domestic economy.

“Moving forward, we foresee the economic performance in 2H18 to expand at slower pace amid of escalating trade war tension,” the research arm projected.

According to MIDF Research, Malaysia’s GDP growth expanded by 4.5 per cent year on year (y-oy) in the second quarter of 2018 (2Q18), below its forecast of 4.9 per cent y-o-y and market expectations of 5.2 per cent y-o-y.

“We opine the slowdown in GDP growth was in tandem with moderating performances of industrial production, manufacturing sales, distributive trade and external trade during the quarter,” the research arm said.

It added that moderating inflationary pressure, strengthening domestic demand and accommodative economic policies as well as strong re-exports growth are the expected to be major drivers for GDP performance in the second half 2018 (2H18).

Moving forward, MIDF Research believed domestic demand especially private consumption would continue supporting economic growth amid of lower marginal propensity to tax, increase disposable income, moderating inflationary pressure and stable labor market.

As for the investment side, public investment is expected by the research arm to further contract in 2H18 as the current Pakatan Harapan (PH) government would review and restructure fiscal planning as well as governmentbacked infrastructure projects.

“Private investment to expand at steady pace particularly with the expanding of re-exports activity.”

On exports, MIDF Research maintained its prediction that Malaysia’s exports will grow by 9.3 per cent in 2018.