KUALA LUMPUR (Aug 21): Morgan Stanley said it expects Malaysia's 2017 domestic demand momentum to be sustained ahead of the nation's 14th General Election (GE14), as fiscal policies stay accommodative.

In a note, Morgan Stanley said historically, domestic demand momentum accelerated ahead of elections, before later tapering.

"On elections, parliament is due to be dissolved by June 18, but the press, including The Straits Times, have reported on the possibility of earlier elections with campaigning activities appearing to be picking up pace recently. Historically, domestic demand momentum has accelerated in the run up to elections, before tapering off thereafter," Morgan Stanley said.

Malaysia held its GE13 on May 5, 2013. 

Today, Morgan Stanley issued its note after Malaysia reported its economy as measured by gross domestic product (GDP), grew 5.8% in 2017's second quarter, from a year earlier.

"The better-than-expected incoming trajectory suggests upside risks to our base case 2017 GDP forecast, which stands at 5.0% YoY [year-on-year]," Morgan Stanley said.