Thursday 28 Mar 2024
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KUALA LUMPUR (June 8): Singapore-based DBS Bank Ltd (DBS Research) has raised its forecast on Malaysia’s economic growth this year to 5%, from a previous forecast of 4.5%.
 
In a note to clients today, DBS Research said this was despite the country’s moderating net exports, which had turned negative as a surge in imports (12.9%) had offset what should have been a good showing in exports (9.8%).
 
Still, DBS Research said overall economic growth for the year — as measured by gross domestic products — will still turn out stronger than previously anticipated.
 
“Not only has the entire growth trajectory been lifted by the first quarter showing, underlying domestic fundamentals are also expected to remain resilient,” the research firm said.
 
“Private consumption and investment will remain the key drivers of Malaysia’s domestic growth story. The factors supporting these two engines are internal by nature and remain highly conducive,” it added.
 
In the first quarter of this year, Bank Negara Malaysia announced GDP grew by 5.6%, the fastest pace since the last two years, driven by private consumption and investments.
 
“Domestic growth was the main driver and accounted for 6.8% points to overall GDP growth,” DBS Research noted.
 
Thus far, DBS Research noted inflation has surprised on the upside, on account of the upward adjustments in pump prices.
Specifically, the research firm said transport inflation averaged 16.5% over the past four months.
 
“However, inflation is believed to have peaked and is expected to ease steadily over the course of the year. Factoring in the recent upside surprises in inflation, we will revise up our full year inflation forecast to 3.7% in 2017, but maintain our projection of 2.5% in 2018,” it added.
 
The latest data from the central bank showed headline inflation has trended lower in April this year.
 
Headline inflation declined to 4.4% in April, from a peak of 5.1% recorded in March, thanks to lower domestic fuel prices, with RON95 petrol prices averaging at RM2.13 per litre in April, as compared with RM2.30 per litre a month earlier.

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