KUALA LUMPUR, July 3 — Malaysia’s economy is set to expand at an accelerated rate after the country’s exports defied the global trend towards protectionism and grew over 20 per cent in early 2017, according to OCBC’s projection.
In the bank’s outlook for select countries heading into the second half of the year, OCBC conceded that its previous estimate for Malaysia was overly pessimistic given the country’s performance in recent months.
It noted that Malaysian firms delivered 21.4 per cent more goods abroad in the first quarter versus the same period last year despite expectations of a global trade slowdown precipitated by “protectionist-in-chief” Donald Trump assuming the US presidency.
Local demand that is a mainstay of the Malaysian economy also remained robust, OCBC said citing Bank Negara Malaysia. Private investment growth was equally strong in the first quarter, increasing by 12.9 per cent over the same period in 2016.
“Against this backdrop and the fact that Q1’s growth print of 5.6 per cent year-on-year was superbly high, our earlier expectation of 4.2 per cent year-on-year GDP growth for the whole of 2017 looks untenably conservative,” it said in the section that described Malaysia as a “Pleasant Surprise”.
“While there remains some risks that whatever fears of protectionism that we had earlier this year may yet pop up as an unpleasant surprise, a baseline expectation that global trade will still proceed apace in the second half looks to be a rational one at this point,” the bank added.
The bank then projected the country’s economy to expand by 4.8 per cent for the full year.
However, OCBC’s prediction is still more pessimistic than others such as RAM Ratings, which raised its full year growth forecast for Malaysia to 5.2 per cent from 4.5 per cent previously.
The bank’s improved outlook also comes after an effusive report by Bloomberg that both described Malaysia as back in favour with investors and the ringgit as “easily Asia’s strongest currency” after its resurgence.
