RAM Ratings: Malaysia

Published on 15 Feb 2017.

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RAM Ratings estimates Malaysia’s economic growth will clock in at 4.2% in 2016, with economic resilience underpinned by domestic demand. External demand remained sluggish last year, despite a more competitive exchange rate for domestic exporters.  Private consumption growth, meanwhile, is anticipated to strengthen to 5.8% following the GST shock of the previous year. On the other hand, the momentum of private investment is envisaged to moderate to 4.5%.
 
Mirroring the analysis in our November publication, Economic Outlook 2017, we expect GDP growth to come in at 4.5% 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. 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. 

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

 

Analytical contact
Kristina Fong
(603) 7628 1011
kristina@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

 

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