Prakash Sakpal, economist at ING, suggests that firmer growth, low inflation, and a healthy external payments position – all are coming together in support of positive investor confidence in the Malaysian economy in the current global economic turmoil.
Key Quotes
“Yet, it’s hard to imagine the economy continuing to outperform the rest of the world as global trade tensions scale new heights. Nor do we see Malaysia’s low value-added electronics sector continuing to beat the global tech slump, though some green shoots of a bottoming of the tech slum have started to emerge from regional data.”
“That said, we see GDP growth in the rest of the year remaining close to the top end of BNM’s 4.3-4.8% forecast for 2019. We maintain our full-year growth forecast at 4.7%. We have cut our inflation forecast for the year to 0.8% from 1.0%, and are now looking to revise our 2% of GDP current account surplus forecast higher.”
“We don’t think the authorities will relax just yet. Persistently low inflation allows scope for more Bank Negara Malaysia (BNM) policy easing. We have stuck in an additional 50bp of BNM rate cut in our forecast for policy rates for the rest of the year, taking them to 2.5% by year-end. Even so, the MYR should remain a resilient Asian currency within emerging markets.”
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