Better Exports To Drive Malaysia's Economy In 2H16

By Azlee Nor Mahmud & Zairina Zainudin KUALA LUMPUR, Aug 12 (Bernama) -- Malaysia's economy is expected to improve in the second half of this year (2H16), with exports likely to be better and amid continuous strong domestic demand as seen in the second quarter. Sunway University Business School Economics Professor Dr Yeah Kim Leng said the 2Q16 gross domestic product (GDP) of 4.0 per cent is considered "respectable" growth from an international perspective. Bank Negara Malaysia (BNM) announced today that the Malaysian economy grew 4.0 per cent in the second quarter (2Q16), leading to a 4.1 per cent growth in the first half of 2016. In the second quarter 2016 (2Q16), domestic demand saw significant improvement, whereby it grew by 6.3 per cent year-on-year from the 3.6 per cent recorded in the previous quarter. Yeah said though weaker than the first quarter, the performance is broadly in line with the range of estimates projected by market analysts and economists, given the challenging external environment. "A positive sign is the continuing strength of domestic demand, particularly the pace of private consumption. "This augurs well for the second half, where exports are expected to improve and provide the needed uplift from the current declining GDP growth trend," he told Bernama. For the first quarter, Malaysia's economy grew by 4.2 per cent, while in the second quarter last year, the country registered 4.9 per cent growth. Meanwhile, RHB Research said going forward, the global economic outlook would be more uncertain following the United Kingdom's decision to exit the European Union (EU), which could influence global trade activity. "The weak global economic outlook and increasing uncertainty suggests that Malaysia's exports will likely remain sluggish in 2H16. "On balance, we expect the growth of Malaysia's real exports to register a modest growth of 0.8 per cent in 2016, slightly higher compared to 0.6 per cent in 2015," research house said in a note. In the just-ended quarter, net exports contracted by 7.0 per cent year-on-year on the back of sluggish global demand, particularly to China and Japan, coupled with weak commodity exports prices. RHB Research has kept its annual real GDP growth forecast of 3.9 per cent for this year. Meanwhile, AllianceDBS Research expects the 2H16 growth to average at 4.1 per cent, thereby registering full-year GDP growth of 4.1 per cent. It said inflation would remain at 3.0 per cent this year on cost-push price pressures. --BERNAMA