KUALA LUMPUR, Malaysia July 10 (NNN-Bernama) The Malaysian economy is expected to expand above five per cent in 2018, said FXTM Global Head of Currency Strategy and Market Research, Jameel Ahmad.
He said consumer sentiment and spending would be key growth drivers for the second half of the year.
Exports growth remains impressive outpacing imports, he said in a media briefing today.
He said in 2017, the Malaysian economy was considered to be an outperformer, with a growth of 5.9 per cent.
During the first quarter of 2018 (1Q18), the Malaysian economy grew 5.4 per cent, and was expected to reach 5.5 per cent during 2Q18.
However, Jameel noted that, like many other emerging markets, Malaysia’s economic growth could be affected by global trade war tensions – the main catalyst for recent market fluctuations.
While rising oil prices have supported the Malaysian economy as it can boost government revenues, global trade war tensions may counteract the effects as it is a threat to global growth, which may lead to less demand for commodities, he said.
Concerns over United States (US) President Donald Trump’s trade policies and tariffs could also spark risk aversion, consequently impacting emerging markets, said Jameel.
However, he said the Malaysian economy remained robust, being less dependent on commodities, with oil-related products representing about 20 per cent of exports.
The rebound in oil prices this year should still provide some support to the local economy, as prices had gained nearly US$15 per barrel this year, said Jameel.
He said the new Bank Negara Malaysia (BNM) Governor, Nor Shamsiah Mohd Yunus, has inherited a strong economy.(BNM is Malaysia’s central bank)
But challenges for the BNM include the US Federal Reserve outlook, US/China relations and US fiscal policy, he said.
He said the risk of inflation increasing in the second half of year also posed a threat to the Malaysia economy, but expected that inflation rate should not be more than 2.5 per cent in 2018.
Recent market volatility presented risks to inflation moving back to above its recent levels, but the risk would be minimised if the external threat diminishes, added Jameel.–NNN-BERNAMA
Source: NAM News Network