KUALA LUMPUR (Aug 11): Hong Leong IB Research has raised its 2017 full year gross domestic product growth forecast for Malaysia to 5.4% year-on-year (from 4.9% previously) and said it anticipates 2Q17 real GDP growth to have grown at a stronger pace of 5.8% y-o-y after the release of various indicators which showed higher strength.

In a GDP preview note today, the research house said 2Q17 GDP growth is higher than the strong momentum of 5.6% y-o-y recorded in 1Q17.

“While we expect near-term growth impetus to remain resilient, our forecast trajectory for a more moderate 2H is retained as the base effect (commodity sector) and exuberance (exports & capital market activity) wear off.

“Despite the upward revision to 2017 GDP print, we maintain our expectations for Bank Negara Malaysia to retain the OPR at 3.00% in the remainder of 2017.

“We opine that (i) spillover from robust exports to domestic demand has not jeopardized growth stability (ii) inflation has eased while core inflation remains contained, and (iii) financial stability concerns are in check (e.g. moderate loan growth at 5.7% y-o-y as at Jun-17 and moderate increase in house prices at 5.3% y-o-y in 1Q17),” it said.