Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 14): Hong Leong Investment Bank (HLIB) raised its fourth quarter (4Q) 2018 gross domestic product (GDP) growth forecast for Malaysia to 4.7% from 4.5% previously, following the recent release of various quarterly indicators.

In a note today, HLIB analyst Felicia Ling said the 4Q18 GDP — which will be released today — is expected to grow increasingly, supported by slower decline in agriculture sector and rebound in mining production as previous transitory constrains ease (e.g. El Nino and gas pipeline leak).

"This is anticipated to offset the slight moderation in manufacturing, services sectors amid continued decline in import duties," she said.

On the expenditure front, net export is anticipated to contribute to overall GDP due to higher trade surplus during 4Q18 period at RM34.6 billion from RM27.3 billion in 4Q17.

"Private consumption is forecasted to grow at a more moderate pace as zero tax holiday period fades. Nevertheless, consumption remains supported by strong labour market and positive wage growth," she added.

Looking forward, Ling said she anticipates GDP to record moderate growth of 4.6% year-on-year in 2019.

"While we anticipate commodity sectors [like] agriculture and mining to rebound as temporary factors continue to ease, this is anticipated to be offset by slower growth in manufacturing, services and construction activity as global trade moderates and consumers adjust to SST2.0 (sales and services tax) amid lower consumer sentiment," she said.

Ling also maintained her expectation for Bank Negara Malaysia to retain the overnight policy rate (OPR) at 3.25% in 2019 unless global growth condition deteriorates significantly.

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