Malaysia to register better economic growth
Based from the current forward looking indicators, Malaysia’s economic growth is expected to be stronger at 4.5 per cent this year, with the first quarter GDP likely to post 4.7 per cent year-on-year (y-o-y) expansion.
KUCHING: Economists believed the country’s economic growth this year will fare better than last year following the release of the gross domestic product (GDP) growth figure on Thursday.
With an improved economic growth of 4.5 per cent registered in the fourth quarter of 2016 (4Q16) as compared to 4.3 per cent in 3Q16, economists opined that the growth momentum will be sustained in 2017.
The stronger 4.5 per cent economic growth in 4Q16 has brought the growth for 2016 to 4.2 per cent.
The research arm of TA Securities Holdings Bhd ( TA Research) predicted a better prospect for the country’s economy in 2017.
The research firm in a report yesterday said, “Based from the current forward looking indicators, Malaysia’s economic growth is expected to be stronger at 4.5 per cent this year, with the first quarter GDP likely to post 4.7 per cent yearon-year (y-o-y) expansion.
“Apart from persistent buoyant private consumption, investment outlook is expected to be anchored by the on-going implementation of infrastructure projects and capital spending in the manufacturing and services sectors,” the research firm said.
Additionally, the research division of Hong Leong Investment Bank Bhd (HLIB Research) in another report said growth projections for the agriculture and mining sectors for this year were raised by 1.7 percentage points and 0.2 percentage point to 4.0 per cent and 3.5 per cent respectively following evidence of stronger recovery than its earlier estimate.
On another note, the research firm trimmed its forecast for the construction sector growth by 1.5 percentage points to 8.5 per cent.
It explained that the lower growth was due to the slower-than-expected pace of the implementation of infrastructure project despite record high contract awards in 2016.
Nonetheless, the research firm opined that the construction sector’s growth this year is expected to be higher than that of 2016 as robust flow of contracts awarded would translate into construction activity in 2017.
As a result, HLIB Research has maintained its 2017 GDP growth forecast at 4.5 per cent estimated earlier.
Apart from that, AllianceDBS Research Sdn Bhd (AllianceDBS Research) expects the 2017 GDP to expand by 4.4 per cent with the inflation rate at three per cent for this year.
In light of the government’s commitment to fiscal consolidation and volatility in external trade’s contribution to growth, AllianceDBS Research believed domestic demand will be the main driver of growth in 2017.
On another development, TA Research said it did not foresee any changes in the overnight policy rate (OPR) which stood at three per cent for the whole year of 2017, with inflation remain manageable between two per cent and three per cent.
Moreover, HLIB Research said given the expectations of resilient economic growth and higher inflation in 2017, the research firm expects Bank Negara Malaysia (BNM) to leave the OPR unchanged at three per cent throughout 2017.
“We opine that risk to growth has somewhat receded given firmer commodity outlook and record high infrastructure jobs acting as growth catalyst.
“As risk to inflation has recently escalated coupled with priority to stabilise ringgit, BNM may opt to stay pat longer despite uncertainty of US trade-related policies,” said HLIB Research.
Meanwhile, AllianceDBS Research also concurred with TA Research and HLIB Research that there will be no change in OPR for this year as inflation remains manageable and domestic growth continues to expand.
Particularly, the research firm believed an unexpected monetary easing could further induce volatility to the ringgit exchange rate.
As a whole, economists were optimistic that the country’s economic growth will recover and post an improved growth this year while noting that the central bank will contain inflation by maintaining the OPR at three per cent.
TA Research