RAM: 4.5% growth for 2020

Rating agency expects GDP to grow by 4.6% this year

PETALING JAYA: RAM Ratings has adopted a more conservative outlook for the Malaysian economy and expects GDP to expand by 4.5% in 2020, which is lower than the government’s forecast of 4.8%.

The rating agency also expected GDP to increase by 4.6% this year, which was also below the government forecast of 4.7%.

“Further easing of monetary policy is on the cards while fiscal policy remains mildly growth-supportive,” it said in a statement yesterday after the macroeconomic and sectoral outlook for 2020 at its annual credit summit held on Wednesday.

RAM said the principle themes discussed during the macroeconomic session centred on the key impact and risks for Malaysia arising from the ongoing Us-china trade war and the global slowdown, along with how Budget 2020 would support growth.

RAM said during a panel session comprising economists and analysts, they also shared their views on the domestic and regional economies.

The panellists concurred that global uncertainties will persist in the foreseeable future, although there is a silver lining as Malaysia has been performing relatively commendably to date.

Some of RAM’S senior analysts briefed investors on the outlook of the various sectors covered by the rating agency.

Of the 11 broad sectors under its radar, automotive and commercial property remain on negative outlook while the rest – including power, telecommunications, toll roads and banking – are stable.

RAM said the automotive segment was weighed down by keen competition in an increasingly more saturated market while the commercial property industry has been plagued by a glut of retail malls and office space.

On the other hand, the credit trends of Ram-rated issuers are generally stable, supported by their strong business profiles and credit metrics.

“The banking sector, a bellwether for the Malaysian economy, is envisaged to shift to a lower gear on account of slower growth.

“Even so, the incumbents are still well-capitalised while their asset quality remains intact despite some potential slippage. All said, about 93% of RAM’S rated entities are on stable outlook and the rating drift is anticipated to improve further next year, ” it said.