KUALA LUMPUR (July 7): Hong Leong IB Research has trimmed its 2015 global growth forecast to 3.4% from 3.5% previously (2014: +3.4%) to reflect softer growth projections in the US and China which are offset somewhat by an upward adjustment in euro zone growth.

In a note today, the research house said emerging economies continued to undergo growth moderation despite an overall mild improvement in the advanced countries, reversing course to become major drag on global growth.

HLIB said it sees more downside risk to China’s growth outlook in 2H15 despite the recent aggressive policy responses to stabilise growth and the stock market.

“We maintain our 2015 GDP growth forecast for Malaysia at 5.0%.

“We expect a modest domestic demand recovery in 2H15 after a 2Q pullback due to GST imposition,” it said.

HLIB Research said private consumption growth was projected to gradually return to historically trend of 6-7% in 4Q15 as GST impact is offset by still steady jobs market and mitigating measures.

“We raise our forecast of current account surplus to RM28 billion for 2015 given higher oil price assumption (US$60/bbl), weaker ringgit, higher commodity export volume and lower import elasticity.

“We opine that fiscal deficit of 3.2% of GDP is achievable.We also maintain our inflation forecast at 2.5% for 2015, as the lower-than-expected GST impact is offset by higher fuel pump prices and potential imported inflation.

“We expect Bank Negara Malaysia to stand pat in 2H15 while ringgit to remain under pressure as negative sentiment overshadows fundamental amid volatile global financial market and unfavourable domestic newsflow,” it said.