KUALA LUMPUR, Oct 1 — MIDF Amanah Investment Bank Bhd Research (MIDF Research) foresees higher gross domestic product (GDP) growth in the second half of 2019 (2H19), buoyed by a better performance in commodity-based sectors especially mining, as well as rising construction activities and effects of the overnight policy rate (OPR) cut.
In a note today, the research house said Malaysia’s economy remains on an upward track, with the country’s leading economic index rising 1.4 per cent to 119.3 points in July 2019 from 117.6 points in June 2019 after a two-month negative streak.
It said on a year-on-year (y-o-y) basis, the index increased by 0.4 per cent, primarily contributed by rises in number of housing units approved, number of new companies registered, real money supply M1, and real imports of semi-conductors.
“The latest performance hints at better economic growth for 2H19.
“In line with that, the Business Tendency Survey (conducted quarterly by the Department of Statistics Malaysia) also indicates better performance, particularly in the third quarter of 2019,” it said, adding that it is maintaining Malaysia’s full-year 2019 GDP growth projection of 4.9 per cent y-o-y.
MIDF Research foresees the industrial production index (IPI), a measure of output from mines, power plants and factories, to continue expanding at a steady pace in 2H19, saying the trade war factor remains a major downside risk to global trade activities and manufacturing production in particular, which has the highest weightage in the overall IPI index.
“Nevertheless, the effects of the OPR cut, easing monetary measures globally, low inflationary pressure, positive progression in construction activities and stable domestic demand would provide support to the industrial production performance,” it said.
Meanwhile, the research house forecasts inflation to return to the low level of below one per cent in the coming months, as the lower base effect resulting from the tax holiday period last year is coming to an end.
“We believe that the RON95 price cap at RM2.08 will continue to put a downward pressure on transport inflation,” it said. — Bernama
