Malaysia’s GDP growth to clock in at 4.2 per cent in 2016 — RAM

KUCHING: RAM Ratings (RAM) estimates Malaysia’s economic growth will clock in at 4.2 per cent in 2016, with economic resilience underpinned by domestic demand, while growth domestic product (GDP) growth is expected to come in at 4.5 per cent in 2017.

According to RAM, external demand remained sluggish last year, despite a more competitive exchange rate for domestic exporters.

The ratings firm noted that private consumption growth, meanwhile, is anticipated to strengthen to 5.8 per cent following the goods and services tax (GST) shock of the previous year.

“On the other hand, the momentum of private investment is envisaged to moderate to 4.5 per cent,” it said.

Mirroring the analysis in its November publication, Economic Outlook 2017, RAM expected GDP growth to come in at 4.5 per cent this year, representing a “delicate recovery”.

“Growth momentum is projected to pick up after the sluggishness of the last couple of years, mainly led by stabilising domestic demand,” it said.

“Private consumption is anticipated to remain resilient at six per cent while private investment growth is seen to strengthen to 5.5 per cent, on the back of ongoing infrastructure developments.”

That said, the ratings firm believed that external demand will pose the biggest uncertainty in terms of economic performance.

RAM noted that 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 per cent.

The ratings firm further noted that unless these factors significantly derail global cyclical demand, we expect exports to record a moderate 1.7 per cent growth this year, following the weak showing in 2016.