KUALA LUMPUR, Feb 9 — Singapore based banking group, OCBC Bank sees the projection of Malaysia’s gross domestic product (GDP) growth to remain strong at 5 per cent this year due to a high base effect of 5.8 per cent last year.
“We are still relatively sanguine on 2018 GDP growth for Malaysia although the 2017 growth was spectacular,” said its chief economist Selena Ling today.
She said the forecasted 5 per cent GDP is supported by the private consumption as it expected to remain strong due to government income support measures, reduced income tax rate and improving sentiments.
“Private consumption was once again the primary anchor of growth thanks to government income support measures and stable market conditions,” she said during the media briefing on “2018 Outlook: As It Gets.”
Malaysia’s GDP growth has constantly accelerated throughout 2017 from 5.6 per cent in the first quarter to 5.8 per cent in the second quarter and finally to 6.2 per cent in the third quarter due to the pick up global trade and oil price recovery, said Ling.
She said private investment is also expected to be strong due to improving external demand and sentiments, however public expenditure will slowdown due to the ongoing consolidation.
Asked on the fiscal deficit, she said the projection for this year will decline to 2.9 per cent as compared to 3.0 per cent last year.
“This decline is driven more by improving economic conditions rather than any structural improvements in budget management.
“Global oil price have recovered substantially and is expected to hover at around US$65 to US$70 (RM255-275) per barrel by end of this year,” she said.
She noted ringgit has significantly strengthened against USD but its movement against other currencies has either been limited or downwards.
“We forecast that ringgit to strengthened against USD due to further relative central bank dynamics.
“However, movement against other countries will continue to remain limited,” she said.