Healthy economic fundamentals to support Malaysia’s growth
Recovery underway amidst domestic and external headwinds
KUCHING: Analysts are generally cautiously optimistic about Malaysia’s economic performance in 2017. growth of 2.2 per cent in 2017, while imports are projected to expand by 1.8 per cent,” it added.
Aside from that, it pointed out that Malaysia has a healthy balance of payments surplus in current account.
On the local front, AllianceDBS Research Sdn Bhd (AllianceDBS Research) pegged a cautious view on the sustainability of domestic demand, given that expectations of its growth momentum seem to be upheld by one-off measures (EPF contribution rate cut, BR1M).
“Additionally, leading indicators such as MIER Consumer Sentiments Index have been pointing downwards (4Q16 at 69.8 compared with 3Q16 at 73.6).
“In addition to higher inflation, BNM guides for a soft labour market, with unemployment rates averaging 3.6 to 3.8 per cent during 2017 (3.5 per cent in 2016),” it explained.
It further pointed out that in the absence of a turnaround in labour market condition and sustainable household income growth trend by year end, overall growth prospects could remain subdued going into 2018.
Asidefromthat,ithighlightedthat as guided by Malaysian Investment Development Authority, approved investments growth is expected to be lower than the 7.7 per cent recorded in 2016.
“Economic uncertainties and increasing protectionist views are cited as key risks to FDI inflow,” it added.
Overall, AllianceDBS Research maintained its gross domestic product (GDP) forecast for 2017 at 4.4 per cent.
Itexplained,“Publicconsumption and investment will continue to grow below trend as the government remains committed to reduce the fiscal deficit further to three per cent of GDP this year.”
The prospect of Malaysia’s economic growth, barring unforeseen shocks, appears to have improved. Kenanga Research