“After better-than-expected growth performance of 5.6 per cent in the first quarter of the year, the economic recovery momentum is beginning to show signs of sustainability.”
RAM RATINGS SERVICES BHD
KUALA LUMPUR: RAM Ratings Services Bhd has revised upward its forecast on Malaysia’s economic growth this year to 5.2 per cent from 4.5 per cent originally.
This followed a strong expansion in the first quarter as the economy started to show signs of recovery.
“After a better-than-expected growth performance of 5.6 per cent in the first quarter of the year, the economic recovery momentum is beginning to show signs of sustainability.
“Most of this upside stemmed from a positive turnaround in business sentiment, which had brought about more productive capacity building in the form of machinery and equipment investments,” it said in a statement yesterday.
A significant rebound in external demand had also supported this robust growth and, in part, had been a key driver of higher business confidence exhibited by export-oriented firms, in line with RAM’s Business Confidence Index findings.
RAM has also increased its inflation expectations for this year to 3.8 per cent, from 3.0 per cent, on the back of a stronger-thanexpected oil price recovery momentum in the first quarter and upward stickiness of food prices, especially food away from home.
It said although the current upward price momentum was still mainly cost-push driven, the acceleration in growth momentum indicated a stronger potential for a higher prevalence of demand-pull inflation in the future.
As such, there was a higher possibility of a 25 basis point hike in the Overnight Policy Rate by Bank Negara Malaysia towards year-end, it added.