Malaysia’s growth forecast retained at 5.5 pct for 2018
KUCHING: Malaysia is expected to grow at 5.5 per cent for 2018, pending the outcome of US-China trade talks and rising uncertainties on the back of the 14th General Election (GE14) this Wednesday, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) projected.
In its economic viewpoint, Kenanga Research noted that the country’s manufacturing condition stumbled again for the third month in April as weak demand conditions continue to drag the Purchasing Managers Index (PMI) below the 50 threshold.
The research arm also noted that April PMI came in at 48.6, compared to March’s 49.5, the lowest in six months.
“According to IHS Markit’s report, lower production requirements and subdued demand conditions led to the deterioration in manufacturing conditions, which exceeded the series trend,” it said.
“In particular, output and new orders declined at an accelerated pace during the month, reflecting lacklustre demand from both domestic and international markets on the back of ebbing economic growth.
“New orders contracted to the fastest pace since July 2017 while new export orders fell to the lowest since December 2016.
“The weaker demand conditions also dragged output for the second consecutive month to the lowest level since July 2017.”
Kenanga Research highlighted that consequently, firms reduced their purchasing activities for the fifth consecutive month with both pre- and post-production inventories observing moderation during the month.
The research arm further highlighted that sharper input infla-
According to IHS Markit’s report, lower production requirements and subdued demand conditions led to the deterioration in manufacturing conditions, which exceeded the series trend.
tion continues to raise prices of output, extending the current period of inflation to 18 months.
“According to IHS Markit’s report, the latest rise in output inflation was the fastest since last September,” it said.
“However on a bright note, input inflation appears to soften as input cost inflation remained broadly in line with the historical average, albeit still rising sharply.
“Moreover, despite the overall softer manufacturing conditions, business sentiments surged to the highest in four-and-a-half years as firms expect demand conditions to improve on the back of new projects.
“Consequently, firms continue to increase their hiring activities.”
Looking ahead, Kenanga Research still saw a dreary outlook for the domestic manufacturing sector as exports appear to remain weak over the first quarter of 2018 (1Q18).
The research arm also saw the weaker April trade figures in hitech power houses – South Korea and Taiwan – as an indication that the global tech upcycle has reached its peak.
“Moreover, as heightened ChinaUS trade tension persists, manufacturers in Asia as a whole could possibly scale back on its production as a precaution.
“Pending the outcome of the US-China trade talk and rising uncertainties on the back of the upcoming GE14, we retain our growth forecast at 5.5 per cent for the year 2018.”
Kenanga Research