IBC Assets: Malaysian economy to grow above 4pc in Q2

A view of the Kuala Lumpur skyline on February 16, 2017. ― Reuters pic
A view of the Kuala Lumpur skyline on February 16, 2017. ― Reuters pic

KUALA LUMPUR, Aug 15 — Malaysia’s economy is projected to expand at a rate of at least 4.0 per cent in the second quarter this year, supported by exports, said IBC Assets Bhd head of research Dr Serge Pierre Besanger.

He said while imports dropped by 9.2 per cent to RM65.9 billion year-on-year in June, it was net export that contributed to the economic growth and there was a significant improvement on that front.

Besanger added that balance of trade widening to RM10.3 billion in June against RM9.1 billion in the previous month.

“While Thailand and Indonesia could lose their Generalized System of Preferences (GSP) status due to persistent allegations of intellectual property breaches, Malaysia is immune to such threats because it is essentially a level playing field and the country has a strong track record in respecting intellectual property,” he said in a statement today.

Besanger said private consumption would remain a key growth driver of the Malaysian economy.

He noted that private consumption was expected to grow at a healthy rate of at least 5.0 per cent in the second quarter despite a slight uptick in unemployment and a tight fiscal policy, which is set to weigh on domestic demand as the government works on gradually reducing the budget deficit.

Capital expenditure was likely to have dropped sharply in the second quarter, as evidenced by the steep fall in imports of capital goods by -23.6 per cent year-on-year in June, said Besanger, who was an acting director at the IMF-Singapore Regional Training Institute during the Asian Financial Crisis.

Capital expenditure would eventually recover, bolstered by infrastructure projects and the redesign of value chains, he said, citing a recent Nomura research report that ranked Malaysia as one of the four largest beneficiaries of trade diversion from the ongoing trade dispute between the US and China. — Bernama

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