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Economists see rebound in Q2,H2 this year

Malaysia’s economy is expected to rebound firmly in the second quarter and second half of the year, said analysts and economists said.

This will be underpinned by receding trade war effects, better commodity prices, low inflationary pressure and strong domestic demand.

Positive news on infrastructure projects such as the East Coast Rail Link (ECRL) project would support the Malaysian economy to pick-up steadily in the near and long terms, analysts at MIDF Research said.

“Global trade uncertainties over the ongoing trade negotiation between the US and China dragged down external trade outlook for emerging markets including Malaysia. In addition, modest pick-up in commodity prices put pressure on commodity-based sectors in the first quarter of 2019. Nevertheless, we foresee a solid rebound in the second quarter and second half of 2019,” they said.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid is “very positive” on the economic opportunities that the ECRL will bring.

“There would be plenty of opportunity especially with regards to ECRL. The land bridges between the two ports (Kuantan Port and Port Klang) are the main long term stories.

“Essentially, Malaysia will be part of China’s Belt and Road Initiative and this will help increase our international trade activities as the traveling time will be cut short via the land bridges,” he said.

Afzanizam was commenting on a Bloomberg article on Tuesday which painted Malaysia’s minimal growth opportunities due to the change of government and the Malaysian Institute of Economic Research projection of a slower economic growth of 4.5 per cent this year from 2018’s 4.7 per cent.

He said there were still massive potential for foreign direct investments (FDIs) in Malaysia, despite what certain quarters were saying.

“There is a concern on policy traction from the Pakatan Harapan government. However, the government is taking in stride in addressing this with the ECRL being a good example.

“After the project was put on hold last year, it finally back on line with a reduced cost. The government is also taking steps to revive certain government linked companies which would require reasonable timeline to be accomplished. Therefore, to ignore Malaysia entirely would be a lost opportunity as there are companies which may not totally be affected by the government policies such as those in the export-oriented industries,” he explained.

Maybank Investment Bank Bhd said investors were generally neutral-to-positive on Malaysia’s macro economy, but majority are underweight on local equities.

“Their exposures and interests in Malaysian equities are mainly in the tech sector due to structural or long-term growth story, while there are also selective interests in thematics,” it said.

These themes include the authorities’ crackdown on elicits, and beneficiaries of long-term growth in the services sectors such as medical tourism.

“Multi-asset fund managers see more upside in Malaysian fixed income given the “positive carry”, undervalued ringgit and the prospect of interest rate cut by Bank Negara Malaysia,” it added.

  • New Straits Times
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