RAM Ratings: Malaysia's GDP to grow 4.5% this year

PETALING JAYA: Malaysia’s gross domestic product (GDP) is expected to grow 4.5% this year, representing a “delicate recovery”, compared with an estimated 4.2% growth last year, according to RAM Ratings.

The rating agency said in a statement yesterday that growth momentum is projected to pick up after the sluggishness of the last couple of years, mainly led by stabilising domestic demand.

Private consumption is anticipated to remain resilient at 6.0% while private investment growth is seen to strengthen to 5.5%, on the back of ongoing infrastructure developments. That said, external demand will pose the biggest uncertainty in terms of economic performance, noted RAM.

“Although data on forward-looking export orders and the tech cycle’s momentum have provided some recent upside to exports of electronic and electrical goods, downside risks stemming from uncertainties vis-à-vis the US’s stance on trade and investment as well as Brexit dynamics will still be pivotal to our cautiously optimistic headline growth forecast of 4.5%,” it said.

Unless these factors significantly derail global cyclical demand, RAM expects exports to record a moderate 1.7% growth this year, following the weak showing in 2016.

Commenting on last year’s growth, the rating agency said while economic resilience was underpinned by domestic demand, external demand remained sluggish last year, despite a more competitive foreign exchange rate for domestic exporters.

RAM Ratings expects private consumption growth to strengthen to 5.8% following the Goods and Services Tax shock of the previous year. Private investment is seen to moderate to 4.5%.