2015 GDP growth projected at 4.9-5.0%

PETALING JAYA: Analysts have projected Malaysia’s gross domestic product (GDP) growth for 2015 to come in at 4.9% to 5.0%, following the third quarter (3Q15) expansion of 4.7%.
“We maintain our 2015 full-year GDP growth of 5%, as 4Q15 (HLIB: +4.9% yoy) is unlikely to stage a strong rebound given subdued domestic sentiment and lingering global economic uncertainties,” HLIB Research said in a report yesterday.
It said headline inflation is expected to average at 2.2% for this year before elevating somewhat next year, factoring in steady fuel prices, and the recent series of administrated price hikes (toll rates, rail fares and cigarette prices). However, underlying inflation would be kept in check, consistent with moderate domestic consumption.
“Notwithstanding a more moderate growth expectations for 2016 and a series of price hikes (tolls, rail fares & cigarettes) which has elevated the near-term inflation outlook, we retain our view that BNM will continue to stand pat at 3.25% into 1H16. Our view is reinforced by the latest dovish monetary policy statement,” HLIB said, referring to Bank Negara Malaysia and its overnight policy rate.
Maybank IB Research maintained its 2015 growth forecast of 4.9%, which implies further slowing in 4Q15, and expect 2016 growth of 4.5% on slower consumer spending, government spending and private investment as public investment rebounds. Net external demand will be less of a drag on improving exports and imports.
“The latest GDP growth forecast is revised from the 4.7% forecast made following the release of Budget 2016. The slower domestic demand mainly reflects further moderation in private consumption expenditure in view of the headwinds facing consumers,” explained Maybank IB.
AmResearch’s full-year GDP projection is 4.9% for 2015. It said GDP advanced by 5.1% as at year-to-date 3Q15 compared with 6.1% during the corresponding period last year. Mainly, domestic demand had advanced albeit at a softer pace compared to 2014.
“Private consumption expenditure had slowed to 6.3% as at year-to-date 3Q15, from 6.8% as at year-to-date 3Q14. Nonetheless, year-end and festive holidays are likely to augur well for consumption expenditure during the final quarter of 2015. Other than that, international trades could be supportive of growth, driven by the improvement in global demand and stronger-than-expected growth in the global front.”
As for 2016, AmResearch said healthy loan growth and M3 (broad money) suggest continued economic expansion going forth. Nonetheless, high levels of household indebtedness and the recent rise in impairments are key challenges for the domestic economy.