Mier revises 2018 real GDP growth projection to 5.5%

KUALA LUMPUR: Research firm, Malaysian Institute of Economic Research (Mier), has revised upwards its real gross domestic product (GDP) growth projection for Malaysia this year by 0.1 percentage point to 5.5% from the previous 5.4%.

Executive director Emeritus Professor Dr Zakariah Abdul Rashid, said this was made to accommodate the actual 2017 data as it became available.

“The economy will continue to be domestically-driven and the private consumption will remain as the engine of growth.

“We can still rely on consumer spending to drive the economy with import and export remain promising even though we experienced absolute trade reduction in February,” he told a press conference after a briefing on Malaysian Economic Outlook.

Zakariah said the GDP growth, however, was likely to moderate in 2019, ranging between 4.8% and 5.3%.

Malaysia’s imports and exports declined in February, partly due to the base effect, he said.

“However, the country still managed to record a hefty trade surplus of RM9bil, that was a 3.3% year-on-year (y-o-y) increase from 2017’s.

“Domestic demand is expected to grow at slower pace of 5.8% y-o-y this year, compared to 6.5% last year, and further moderate to 5.3% next year,” he said.

On the ringgit, Zakariah said it has appreciated significantly from the previous 4.5 versus the US dollar and was likely to improve to between 3.65-3.7 by year-end if the momentum were to continue.

He said the stable ringgit would definitely strengthen the purchasing power as the domestic price tended to move downward. “By looking at the movements of the exchange rate for the past three months they are quite encouraging. If they remain stable at this manner, it will be relatively easy for us to manage the economy,” he said.

Zakaria said the improved exchange rate has resulted into a better inflation rate.

He projected it to moderate to 3% this year but rebound to 3.2% in 2019.

“We think inflationary pressures will go down this year as the exchange rate has improved which mean there will be a less pressure on imported inflation.

“The inflow of exchange rate will be more powerful compared to the increase in crude oil (prices),” he said.

In January 2018, headline inflation recorded a growth of 2.7% while February was 1.4%, its slowest pace since October 2016.