Asean Inflation To Ease This Year: Merrill Lynch

KUALA LUMPUR, Jan 19 (Bernama) -- Merrill Lynch (Singapore) Pte Ltd expects inflation in Asean countries to ease this year on the back of deflationary forces from a slowing global economy, says Economist, Global Research Chua Hak Bin. “Headline inflation should ease to the mid or lower end of central banks' targets and forecasts, with the exception of Singapore,” he said at a media briefing entitled "ASEAN Economics 2012: Navigating Turbulence" here on Thursday. He projects Malaysia‘s inflation at 2.6 per cent for 2012 and sees Bank Negara cutting policy rate by 50 bps in the second quarter when inflation eases to below three per cent. “If inflation can come down to below three per cent in the coming months, it will open room for Bank Negara to provide a rate cut. There’s room for inflation to go down below three. "Easing will help, we have already seen easing happening in a couple of countries, Indonesia has cut its policy rate and the Philippines will probably cut too,” he said. Chua forecasts a Gross Domestic Product growth of 3.6 per cent for Malaysia this year in view of the current situation in Europe and growth declining in the United States especially from the middle of this year. He also puts the probability of recession in Malaysia at 20 per cent, adding he sees good export and manufacturing numbers for the country. “Maybe the economic transformation projects fairly support Malaysia. If something happens in Europe in the next few months, Malaysia will not be so bad,” he said. On the local stock market, he said it could probably underperform due to the uncertainty and political risk. However, Chua said Malaysia is still a defensive market, adding he expects a pick-up in the second half of the year. -- BERNAMA