“Malaysia’s growth will be supported by continued expansion of domestic demand and exports.”
Domestic demand and stronger exports expected to support Malaysia’s GDP growth
LEE HENG GUIE, Socio-Economic Research Centre executive director
MALAYSIA’S economy is on the right track to grow at 4.3 per cent with an upside potential as consumer spending to remain the growth driver, said Socio-Economic Research Centre (Serc).
Its executive director Lee Heng Guie said this would be supported by continued expansion of domestic demand, albeit slower, as well as better export growth.
While consumer spending would continue to call the shots, it is expected to grow by 5.7 per cent this year compared with 6.1 per cent last year on cautious sentiment, higher inflation, rising cost of living and lower purchasing power.
“Private investment growth is expected to remain stuck at low and moderate growth path of 4.5 per cent compared with 4.4 per cent last year amid cautious investor sentiment, impact of weakening ringgit and uncertainties ahead of the general election.
“The ongoing implementation of public infrastructure projects and capital investment in manufacturing and services would underpin private investment,” said Lee after this year’s quarterly economic tracker briefing, here, yesterday.
However, Serc cautioned that this year’s economic growth estimate is partially premised on consumer spending strength, which may face hurdles from higher cost of living, cost-driven inflation pressures and weak sentiments.
Exports also could falter if there was trade flow disruption from protectionist mindset and financial markets’ volatility, said Lee.
“Following Trump’s signing of executive orders aimed at identifying and targeting foreign trade abuses, Malaysia is among the 16 countries identified with trade imbalances in the United States.
“Inflationary pressures are developing in recent months, reflecting the combined impact of fuel prices adjustment, spillovers of the ringgit’s depreciation on imported goods and services and cost-related pressures,” he added.
Lee said the exports performance is a silver lining to the economy partly aided by a weaker ringgit, besides higher demand for electronics and better crude oil and commodity prices.