Country’s GDP to increase following TPPA deal
KUCHING: Malaysia’s Gross Domestic Product ( GDP) is projected to increase to US$ 211 billion between 2018 and 2027 with the Trans- Pacific Partnership Agreement ( TPPA) coming into play, says Malaysian Industrial Development Finance Bhd ( MIDF).
However, it expects Malaysia’s economy to continue seeing a slowdown as external uncertainties mount from global economic powerhouses such as UK, European Union ( EU), China and US.
“In Malaysia, we saw our exports slowing down as countries worldwide decrease their imports.
“This is not something foreign to us as this is a global phenomenon,” said chief economi st Dr Kamaruddin Mohd Nor during the ‘Economic Discussion with MIDF’ held here yesterday.
Also present during the talk was MIDF head of development finance division, Azizi Mustapa.
Kamaruddin said that initially, the research firm believed exports could grow 3.9 per cent y- o-y from 2015.
However, based on our date for the first three to six months, the firm revised its exports data projection from 3.9 per cent to minus 0.9 per cent.
“Looking at the trade performance from our country as well as the trade performances of other countries, things are not going so smoothly, and we think that this will go on for at least, in the short run,” Kamaruddin said.
He noted that earlier this year, global financial institutes such as World Bank and International Monetary Fund have also downgraded their growth forecast of the world’s economic performance.
As for Malaysia’s GDP) rowth, Kamaruddin noted that Malaysia’s GDP has been on a decline since the first quarter of 2015 (1Q15)
While business and consumer confidence have improved monthon-month (m- o-m) this year, he said GDP it still remains weak compared to last year.
As for manufacturing sector, based on leading indicators, we expect a slowdown in the next two to three months.
“These leading indicators have shown that they have been on a downward trend since September last year. It is not accurate but it gives us direction of where the economy is heading.”
Looking at the rigngit, the economist expects our currency to remain volatile as macro factors such as the US Fed’s decision on an interest hike is expected to have a big impact on its movement.
However, he pointed out that MIDF Research does not expect US to increase its interest rates this year given the current global economic conditions as well as US’ economic numbers are still below expectations.
Domestically, Kamaruddin believes Bank Negara Malaysia ( BNM) will implement another overnight policy rate (OPR) rate cut before the end of this year.
“While the first rate cut took us by surprise, we still expect another 25bps rate cut before the end of the year.
“The reason being that we cannot rely on external factors to push our economy in 2016. We have to do something on the domestic side, in terms of monetary.
“In the third and fourth quarter, we expect a slowdown in the domestic economy that warrants another rate cut for the year. We expect the year- end OPR to be 2.75 per cent while the ringgit is expected to hover at RM3.95 per dollar,” he opined.
In Malaysia, we saw our exports slowing down as countries worldwide decrease their imports. Dr Kamaruddin Mohd Nor, chief economist