KUALA LUMPUR (Aug 26): Malaysia’s economy is expected to expand at a solid pace in the second half of the year (2H19), said MIDF Research.

The research house said the growth momentum will be underpinned by strong domestic demand, further recovery in the commodity-based sector, namely agriculture and mining, and positive progression of projects for the construction sector.

“Effects of the lower overnight policy rate is predicted to appear in 2H19 with inflationary pressure stays low and job market at full-employment condition,” it said in its economic brief today.

It was commenting on Malaysia's Leading Index for June which registered 117.6 points, down 0.3 per cent from a month earlier.

However, the LI indicated the country’s economy will remain growing in October to December 2019.

Commenting further, MIDF Reseach said on the commodity side, steady pick-up in crude palm oil price and lower tariff rate by India are positive factors for the palm oil industry, while the return of Kebabangan Gas Field that is anticipated to run at full capacity in August 2019, is expected to boost up mining output.

"In addition, the revival of the East Coast Rail Link project and other infrastructure projects would provide additional growth in the Malaysian economy.

"Nevertheless, global trade uncertainties remain as a downside risk factor to export-oriented economies like Malaysia," it added.