Malaysia likely to report pick-up in Q1 economic growth
A strengthening economy is pivotal for Prime Minister Datuk Seri Najib Abdul Razak, who is widely expected to call early elections this year.
The median forecast in a Reuters poll of 12 economists was for 4.8% annual growth in January-March, up from 4.5% the previous quarter. If the pace is 4.8%, January-March will be the best period since the second quarter of 2015.
Exports from Southeast Asia’s third-largest economy rose strongly in early 2017, aided by China’s push to rebuild inventory and higher commodity prices, Standard Chartered said in a May 12 research note.
Malaysian industrial production “was resilient in the first quarter, with the manufacturing sector growing 5.6% year on year versus 5.0% in the fourth quarter, on the back of robust demand for electronics”, the bank said.
March exports surged 24.1% from a year earlier, slowing just slightly from the 26.5% pace set the previous month and almost double the 13.6% expansion in January.
Malaysia’s economic growth will also likely continue to get a boost from domestic demand, plus increased government revenue from higher global oil prices, Moody’s Investors Service said last week.
“Private consumption remained robust thanks to the sustained low interest rate environment and the flow-on from upbeat global demand,” Moody’s said.
The ringgit has strengthened about 3.7% against the dollar this year, after a protracted slump partly caused by poor global demand for Malaysian oil and commodities.
Capital outflows hit a record in November-January, when foreign investors divested their holdings of government bonds to the tune of RM27.9 billion.
Analysts attributed the capital flight to Bank Negara Malaysia’s decision to clamp down on offshore trade of the ringgit – a move that the central bank insists has helped stabilise the currency.
Pressure on the ringgit “should be balanced for now”, as Malaysia has sustained its current account surplus and reduced its portfolio outflow risks, said Vaninder Singh, Asia economist for NatWest Markets. – Reuters
Source: The Sun Daily