Malaysia's Economic Growth To Slow To 5.1 Pct In H2 2018 - RHB Research

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KUALA LUMPUR, July 11 (Bernama) -- Malaysia’s economy is expected to continue moderating in the second half of this year due to slowing exports, monetary tightening in major economies, as well as rising trade tensions.

RHB Research Institute Sdn Bhd said the growth for the second half (H2) of this year was expected to continue at a slower pace of 5.1 per cent year-on-year (yoy) from the estimated 5.3 per cent in the first half (H1).

“We are maintaining Malaysia’s real gross domestic product (GDP) growth forecast at 5.2 per cent for 2018, down from +5.9 per cent in 2017, but we foresee a downside risk to our 2019 growth of five per cent,” it said in its Economic Outlook report on Tuesday.

It said signs of slowing exports was in tandem with global growth, and on balance, Malaysia’s real exports were projected to slow to 5.1 per cent yoy in H2 2018 from 5.5 per cent in H1 2018.

“Domestic demand, however, is expected to grow at a resilient pace for the remainder of 2018. This is driven mainly by a stronger expansion in consumer spending with the zero-rated Goods and Services Tax effective June 1,” it said.

It also stated that there would be a broad-based slowdown across major sectors following the moderation in export demand.

“Overall, we are of the view that slower industrial activities will likely bring about a moderation in services activities as well,” it added.

The research firm said that inflation was expected to moderate to 1.9 per cent this year from 3.7 per cent in 2017, following the fixing of fuel prices.

“Despite lower-than-expected headline inflation, we believe another round of rate hike remains on the cards this year (+25 basis points to 3.5 per cent),” it added.

Meanwhile, it said the ringgit was expected to trade weaker at 4.10 against the US dollar by the end of 2018 compared with 4.02 currently.

As for private investment, RHB Research said it was expected to slow to 4.1 per cent in H2 2018 from an estimated of 4.7 per cent in H1 2018.

“This is as the new administration reviews its expenditure, as well as the country’s construction and infrastructure projects. We believe that the impact will likely be more apparent in 2019,” it said.

For the 2018 full year, private investments are expected to grow 4.4 per cent, more than half of the 9.3 per cent growth recorded last year.

-- BERNAMA