Malaysia's GDP Expected To Improve To 4.5 Pct This Year -- RAM

KUALA LUMPUR, Jan 10 (Bernama) -- Malaysia's gross domestic product (GDP) is expected to improve to 4.5 per cent this year from the estimated 4.2 per cent in 2016, said RAM Rating Services Bhd. Its Economist, Kristina Fong, said for the past couple of years, the Malaysian economy has gone through a lot of downside risks and challenges. She said RAM saw some prospects of stabilisation on the macro indicators for this year. "For example, a couple of years ago we saw private consumption weakening with the implementation of the goods and services tax but tapered off after sometime. "This year, we foresee better labour conditions, wage growth as well as normalisation of domestic demand, backing up the growth prospect for this year," she told reporters after a media briefing on RAM's first Malaysian Business Confidence Index here today. Fong said there were some upsides on external demand with the trade indicators pointing towards stabilisation for this year. She said coupled with resilient domestic demand it contributed to an improved GDP forecast this year. Fong also expected the electrical and electronic sector to strengthen Malaysia's export for 2017 and remain competitive compared to other regional peers. Meanwhile, she said, the ringgit was expected to remain volatile with downward pressure for the first half of 2017. It was expected to improve in the second half of the year, she said. "The ringgit is still volatile at the moment as investors in the market still price in with their expectations, especially with the US president-elect Donald Trump or 'British Exit' referendum," Fong said. RAM's average range for ringgit this year hovers between four and 4.50 against the US dollar, she said, adding that the wide average range represents the external volatility that RAM is expecting for this year. "With the increase in volatility, it could hover above 4.5 at some point but if we average it out, it is expected to fall within the range," she added. On Bank Negara Malaysia's measures to curb the ringgit from sliding further, Fong said, it would definitely help to stabilise the ringgit but the full extent of the measures were yet to be realised. As for the monetary policy for this year, RAM believed that it was optimal if the Overnight Policy Rate stayed at the current three per cent rate. Inflation was also expected to be slightly higher on the back of improving oil prices and volatility of exchange rate, Fong said. -- BERNAMA