M’sia outperforms SE Asian peers in exports momentum
PETALING JAYA: Malaysia’s exports momentum has outperformed in Southeast Asia, according to the Institute of Chartered Accountants in England and Wales (ICAEW).
It said this reflects a more modest deceleration in export growth and resilient domestic demand.
In comparison, growth of trade dependent economies such as Singapore, Thailand and the Philippines saw slow momentum in the second quarter (Q2).
Despite the outperformance of the Malaysian economy to date, ICAEW expects Bank Negara Malaysia to lower interest rates by 25 basis points (bp) in December, with a further 25bp cut in Q1 of 2020.
“This is provided the government will continue to focus on fiscal consolidation in the upcoming budget announcement on October 11, 2019,” it said in the latest “Economic Update: Southeast Asia” report.
Meanwhile, economic growth across the Southeast Asia region is projected to moderate to 4.5% in 2019 from 5.1% in 2018 amid another round of tariffs and trade restrictions by the US and China.
Against a challenging external backdrop, ICAEW estimated that Singapore to dip into a manufacturing-led technical recession (two consecutive quarters of negative growth) in Q3’19.
“Growth is also set to remain below potential in Indonesia, the Philippines and Thailand. Meanwhile, although growth is set to ease in Vietnam, at 6.7% this would place it as the fastest growing Southeast Asian economy.”
Due to the challenging global conditions and lower US interest rates, it expects central banks across the region to further reduce policy rates to support domestic demand.
“Fiscal policy should also become more supportive amid higher infrastructure investment.”