Malaysia's GDP Following Positive Trajectory -- FXTM Research

By Nurul Hanis Izmir KUALA LUMPUR, Sept 7 (Bernama) – Malaysia’s trade balance data as a whole have been above expectations for most of 2017, and they continue to fuel optimism the nation’s gross domestic product (GDP) growth is following a positive trajectory, said FXTM Research Analyst, Lukman Otunuga. “A likely factor behind this positive trade performance could be the high demand for exports, as Malaysia is an attractive destination for importers, thanks to its reputation as a reliable manufacturer,” he told Bernama. He said concerns about US President Donald Trump’s protectionism stance and the resulting low global trade fears were not realised in Malaysia. This, according to him, was another reason why Malaysia’s trade performed well in the first seven months of 2017. “If anything, global growth and more importantly in this case, global trade, has been resilient in 2017 and should continue to benefit Malaysia,” he said. According to the Ministry of International Trade and Industry’s (MITI), the country’s trade performance for January-July 2017 breached the RM1 trillion mark to RM1.01 trillion. “It rose by 22.7 per cent from the corresponding period of 2016 and the figure was registered two months earlier than the normal trend,” it said. MITI said the better trade performance was supported mainly by trade with ASEAN, China, the US, the European Union, Japan, India and Taiwan. Exports surged by 22.3 per cent to RM529.68 billion and imports rose by 23 per cent to RM478.71 billion, resulting in a trade surplus of RM50.97 billion, it said. For July, MITI said, exports maintained the steady growth momentum, up 30.9 per cent to RM78.62 billion compared with a year ago. On imports, Lukman said, they were slightly higher when compared with the exports. Lukman said the sentiment towards the Malaysian economy has been elevated this year, with the nation’s improving macro-economic landscape supporting consumer sentiment and likely increase in consumer spending. “There are still purchasing power that might have been helped by the recovery in the local currency. “The strong level of imports should also support domestic economic growth. This trend may be sustained in the coming months if consumer sentiment is supported by stabilising macro fundamentals at home,” he said. On interest rate, which Bank Negara Malaysia (BNM), the central bank of Malaysia, was expected to announce Thursday, he said, FXTM Research expected it to leave the rate unchanged for the remainder of 2017. Malaysia’s rate of inflation dropped to 3.2 per cent in July, hinting at improved price stability, he said. “With consumer prices stabilising, and currently within BNM’s 2017 3-4 per cent target, inflationary pressures may be a thing of the past. “As the ringgit continues to recover and confidence over Malaysia’s economy grows, it is possible that headline inflation will continue its gradual downtrend, although the exact figure might fluctuate above/below the forecast marginally at times,” he said. Meanwhile, RHB Research Institute, in its note Wednesday, said it expected the current account surplus to narrow to RM24.7 billion, or 1.9 per cent of GDP, this year, from RM25.1 billion, or 2.4 per cent of GDP, in 2016, mainly on account of the smaller merchandise trade surplus. “This is on the back of a stronger import growth outlook that would likely outpace the increase in exports. “At the same time, the pick-up in economic growth would also result in a higher deficit in the services and income accounts,” it said. -- BERNAMA