RHB Research Sees Subdued Growth In Malaysia's Real GDP In 2017

KUALA LUMPUR, Sept 20 (Bernama) -- Malaysia's real Gross Domestic Product (GDP) growth is expected to sustain at a subdued pace of 4.0 per cent in 2017 from 3.9 per cent estimated for this year, said RHB Research. It said the fragile economic growth coupled with the headwinds suggested that the global economy and Malaysia's exports were susceptible to any unfortunate event which could offset the modest improvement in domestic demand. "Despite the challenging external outlook, the current account surplus in the balance of payments is expected to improve modestly to US$4.87 billion (RM20.2 billion) or 1.6 per cent of GDP in 2017 as the commodity trade surplus is expected to widen slightly following a recovery in commodity prices. "This will likely provide an underlying support for the ringgit," the research firm said in a note on Tuesday. Looking ahead, RHB Research said consumer spending was projected to sustain at a reasonably strong pace of 5.4 per cent in 2017, compared to an estimate of 5.1 per cent in 2016. This was following the full-year impact from the hike in minimum wage and civil servants' pay in July 2016, as well as the reduction in employees' contribution to the Employees Provident Fund that took effect in March 2016, which would likely be felt in 2017. "However, relying on consumer spending to drive economic growth has its downside risk as consumers could turn cautious if the economic situation deteriorates next year," it said. The research house also expects the government to keep its fiscal deficit at around 3.0-3.1 per cent of GDP in 2017. The interest rate outlook still tilted towards the downside, it said. "We are of the view that the central bank will likely keep interest rate unchanged at the current level of 3.00 per cent for the rest of the year but a further 25-basis point cut cannot be ruled out in the first half of 2017, if growth slows further," it added. --BERNAMA