RAM lowers Malaysia GDP to 4.5 per cent for 2020

RAM Ratings lowered its Gross Domestic Product (GDP) projections to 4.5 per cent for the year 2020 compared to an estimated 4.6 per cent for 2019.

This comes as further easing of monetary policy is on the cards for Malaysia, while fiscal policy remains mildly growth-supportive.

RAM Ratings shared its views on Malaysia’s macroeconomic and sectoral outlook for 2020 at its annual credit summit, held in Kuala Lumpur.

The principle themes discussed during the macroeconomic session centred on the key impact and risks for Malaysia arising from the ongoing US-China trade war and the global slowdown, along with how Budget 2020 will support growth going forward.

“Against this backdrop, Malaysia will need to harness its inner strength from resilient domestic demand and accommodating policy measures to build a buffer against external challenges, which are likely to impinge on its growth next year,” it highlighted in a statement.

At the same event, a panel session comprising economists and analysts also shared their views on the domestic and regional economies.

The panellists concurred that global uncertainties will persist in the foreseeable future, although there is a silver lining - Malaysia has been performing relatively commendably to date.

Meanwhile, some of RAM’s senior analysts briefed investors on the outlook of the various sectors covered by the rating agency.

Of the 11 broad sectors under its radar, automotive and commercial property remain on negative outlook while the rest – including power, telecommunications, toll roads and banking - are stable.

The automotive segment is weighed down by keen competition in an increasingly more saturated market while the commercial property industry has been plagued by a glut of retail malls and office space.

On the other hand, the credit trends of RAM-rated issuers are generally stable, supported by their strong business profiles and credit metrics.

The banking sector, a bellwether for the Malaysian economy, is envisaged to shi to a lower gear on account of slower growth.

Even so, the incumbents are still well-capitalised while their asset quality remains intact despite some potential slippage.

All said, about 93 per cent of RAM’s rated entities are on stable outlook and the rating dri is anticipated to improve further next year.

(From le ) RAM head of research Kristina Fong, Maybank Investment Bank Bhd group chief economist Suhaimi Ilias, Manulife Asset Management Services Bhd senior fixed income portfolio manager Eslie Tham and RAM head of sovereign ratings Esther Lai pose for a photo during RAM’s Annual Credit Summit 2019.