Most research houses have revised their projections for Malaysia’s GDP upwards, based on strong domestic demand and better exports.
KUALA LUMPUR: Despite gloomy views about Malaysian politics, research houses appear confident that the economy is on a growth trajectory.
The faster growth is expected to be driven by domestic demand and strengthening exports.
AmBank Research, in its latest economic update, said Malaysia’s gross domestic product (GDP) would reach 5.0% this year.
Last year, the country registered a GDP growth of 4.2%, down from 5% in 2015 and 6% in 2014. However, the economy expanded 5.6% in the first quarter of this year.
The International Monetary Fund (IMF), on July 25, raised Malaysia’s GDP growth projection for this year from 4.5% to 4.8%.
IMF director of research Dr Maurice Obstfeld said: “We have upgraded our growth outlook for Malaysia this year as we see successful efforts undertaken to increase the sustainability of debt which is on a downward trend. In addition, the country’s steady handling of monetary policy is commendable.”
A week earlier, the Asian Development Bank upgraded Malaysia’s growth outlook to 4.7% from 4.4%.
On July 2, OCBC Bank upgraded Malaysia’s GDP growth to 4.8% for 2017 from 4.2% earlier.
Nomura Singapore Ltd had earlier revised Malaysia’s 2017 GDP forecast to 5.3%, higher than the other research houses.
Saying strong domestic demand and strengthening exports would lift the economy, the Socio-economic Research Centre Sdn Bhd, or SERC, raised its 2017 GDP growth forecast to 5% from 4.3% previously.
According to MIDF Research, private investment and an increase in domestic economic activities will be the main drivers of economic growth this year.
MIDF Research had said in an economic brief: “Due to favourable global and domestic economic activities, we expect Malaysia’s economy to grow stronger this year as compared to 2016.
“Since 2012, private investment has been moderating. Tepid growth in the volume of world trade in goods and services is among major factors dragging down investment activities globally.
“However, looking at private investment’s indicators, we opine that the expenditure component will break its five consecutive years of deceleration in annual growth.
“We expect private investment to expand by 5.6% in 2017 due to solid improvement of economic activities in Malaysia.”
On July 4, Treasury secretary-general Mohd Irwan Serigar Abdullah said Malaysia’s economy could grow 5% or more this year, based on the country’s first-half performance.
Second Finance Minister Johari Abdul Ghani, after chairing a Budget 2018 focus group meeting on July 28, said that the nation could not allow politics to be in the way of economic growth.
“Politics must not impede the economy because everyone will stand to lose if there is no growth,” he said.