KUALA LUMPUR, Dec 14 — Malaysia’s real gross domestic product (GDP) growth is expected to remain strong at 5.5 per cent in 2018, driven by cash handouts ahead of the general election and flagship rail projects such as the East Coast Rail Line (ECRL), said UBS Investment Bank.
“We estimate the activities associate with the ECRL construction, sorted for early 2018, to add 0.3-0.5 percentage point to the GDP growth. We expect a similar uplift from the High-Speed Rail project in 2019,” Associate Economist Alice Fulwood said during a conference call today.
She said the strong investment inflow into Malaysia, driven by the China’s One Belt One Road policy coupled with relative preference for American and Chinese corporate investments, would also contribute substantially to the upbeat growth forecast.
For this year, Fulwood said the GDP would likely grow six per cent amid lower inflation rate.
She expects the headline inflation to drop to 3.4 per cent in 2018 from 3.9 per cent this year, largely due to rapid increase in fuel prices in early 2017.
“We think Bank Negara Malaysia will hike rate by 25 basis point twice in 2018, one in January and another in the second half of the year,” she said.
Fulwood said the strong domestic economic outlook and hawkish monetary policy outlook would underpin the ringgit strength next year, anticipating the local unit to trade at 4.10 by end of 2017 and strengthen to 3.90 against the US dollar in 2018.
On the upcoming 14th General Election, she said the risks towards investment dynamic seemed to be relatively low as most foreign investors were expecting policy continuity. — Bernama
Source: The Malay Mail Online