Friday 29 Mar 2024
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KUALA LUMPUR (May 18): The seismic fiscal measures, some of which include abolishing the goods and services tax and reviewing mega-infrastructure projects, as well as sweeping governance initiatives, have placed Malaysia in a riveting spot, according to DBS Bank Ltd.

While consumption is anticipated to remain a key economic growth driver, the Singapore-based bank said the new policy changes, some of which are in the pipeline, could be a drag on some public-driven investments.

“Potential upside to consumption resulting from the removal of GST could be offset by weakness in investment growth and government spending,” DBS said today in an economics and strategy note.

DBS expects the overnight policy rate to stay unchanged at 3.25% for the rest of the year as the risk of inflation is likely to remain moderate amid normalising economic conditions.

“Inflation has continued to surprise on the downside, hence prompting a downward adjustment of our inflation forecast to 2.6% for 2018,” Singapore’s largest bank added.

It forecast economic growth to slow to 5% in 2018 after an expansion of 5.9% last year.

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