PETALING JAYA, Feb 28 — With domestic demand expected to pick up, some research houses opined that Malaysia’s gross domestic product (GDP) will grow by between 4.3-4.4 per cent this year.
Affin Hwang Investment Bank Bhd Chief Economist, Alan Tan, said the firm expected Malaysia’s growth to pick up from 4.2 per cent last year to 4.4 per cent this year.
In 2017, he said, both private consumption and private investments should continue to be well-supported by healthy consumer spending as well as some of the infrastructure projects, he said.
“We are expecting some pick-up in domestic demand in 2017 and the turnaround story is on the export front.
“In 2015, exports were big as the net export contribution to GDP growth was 3.8 per cent in 2015, 1.8 per cent in 2016 and we expect a turnaround in 2017, thus contributing to GDP growth of 4.4 per cent,” he told reporters at the Economic & Business Outlook Conference 2017 here today.
The one-day conference is organised by Real Estate and Housing Developers’ Association (REHDA)’s research arm, REHDA Institute.
Tan said despite recent developments on the global front, the projected 4.4 per cent growth was slightly below the mid-point of the four-five per cent official forecast with the downside risk lying in the unexpected slowdown of the external environment.
The research firm also projected fiscal deficit to narrow from 3.1 per cent of GDP in 2016 to three per cent in 2017 (2015: 3.2 per cent of GDP). Inflation, on the converse, would edge up from 2.1 per cent in 2016 to 2.7 per cent for 2017, with inflationary pressures from the weaker ringgit and higher imported inflation, he said.
“The overnight policy rate is expected to remain unchanged at three per cent by end-2017, while sharp improvements in yields of the US dollar-denominated assets may risk some capital outflow from Asia back to the US, as investors also expect a sharper appreciation of the US dollar against regional currencies,” he said.
Tan said comparing the economic data with the previous two (economic) downturns, the fundamentals of the country still looked decent. In fact, he said, the International Monetary Fund also projected a 3.4 per cent growth in the world’s economy for 2017 which would translate to a better year for the global front.
“We continue to enjoy a current account surplus and similarly the government is committed towards fiscal consolidation and is on track to achieve a smaller deficit going forward,” said Tan.
He said if Malaysia were to be compared with other countries in the region, it could be seen clearly that one of its fundamental strengths was really in the current account surplus.
“Going forward, we think this surplus would remain unlike other countries,” he said.
Meanwhile, Socio-Economic Research Centre Sdn Bhd Executive Director, Lee Heng Guie, said the research house expected 4.3 per cent GDP growth this year.
“There is a potential (for) this number to come out slightly better, as export growth continues to expand for the last two months,” said Lee. — Bernama