KUALA LUMPUR (July 3): Going into the second half of 2015 (2H15), Malaysia’s growth is envisaged to remain weak, due to challenging external conditions.

“Growth momentum in key trading partners had moderated and will remain low in the coming quarters. This will have spill-over effects on Malaysia’s growth prospect,” BIMB Research said in its economic update today.

“Hopes will be pinned on a gradual improvement in global demand, henceforth providing the much-needed jab in the arm on the external front.

“A recovery in commodity prices and global demand would see the ringgit regaining some lost ground,” they said.

The dollar could test lower against the ringgit, possibly towards 3.65-3.70 levels over the coming weeks, due to the recent positive revision on Malaysia’s outlook by Fitch, BIMB added.

However, they did not rule out upside pressure of the dollar against the ringgit from possible Fed tightening of US monetary policy, financial volatility from Grexit risks, Malaysia’s contingent liability, as well as vulnerability to external shocks.

“The ringgit is expected to stabilize by end of the year, as the market better understands the path of US interest rate normalisation.

BIMB expects full year global growth to slow to 3% after 3.3% last year, with emerging markets projected to experience setbacks due to economic weakness in China.

“The Chinese central bank responded with rate cuts, and more easing measures are expected to be unveiled in 2H,” they added.