Slowdown business confidence in 2Q18 expected
KUCHING: Business confidence in Malaysia is expected to moderate further in the second half of 2018 ( 2H18) due to the lack of clarity in the directions of the new government’s policies, analysts observed, based on the Department of Statistics’ latest survey on the nation’s overall business performance.
According to the latest Business Tendency Survey, Malaysia’s overall business confidence was registered at 7.8 per cent, the slowest in three quarters.
Based on these statistics, MIDF Amanah Investment Bank Bhd’s research arm ( MIDF Research) commented, “We opine business confidence for the three to six months to stay low amid of policy changes and reforms made by the government.
The review of mega infrastructure projects and cancellations of High- Speed Railway Singapore- KL ( HSR Singapore- KL) and MRT3 will have significant impacts on overall business confidence and also investment flows.”
It explained, by sector, business confidence in construction sector fell off the cliff, down 24.8 per cent post GE14.
Construction sector is highly- correlated to political condition as it involves huge government investment on mega infrastructure projects. We can expect further pessimistic mood in the sector with the latest announcement of scrapping off HSR Singapore- KL and MRT3,” it said.
It also pointed out that other mega projects are expected be review by the newly- elected government.
On the other hand, it highlighted that business confidence in manufacturing sector reached highest on record at 19.7 per cent in the second quarter of 2018 ( 2Q18).
Despite of global trade war factor, steady global demand and rising commodity prices add support for the sector to stay on uptick direction.
On top of that, increase in re- exports activities possibly boost up external trade and manufacturing performances in Malaysia,” it commented.
Looking ahead, MIDF Research believed that export- oriented sectors are expected to stay on optimistic mood given that economic environments in major and emerging economies remain upbeat.
For instance, underpinned by robust industrial activity in the US, jobless rate went down to 18year low at 3.9 per cent in April 2018.
As in China, consumer confidence has been hovering above 120 points for seven-consecutive months since October 2017, a level not yet seen since 1993,” it said.