Business and consumer sentiment improved for the second quarter of 2017, in line with the current upbeat momentum in Malaysia’s external trade as well as domestic economic activities.
Quoting survey by the Malaysian Institute of Economic Research (MIER), MIDF Research in a note today said the Business Condition Index (BCI) hits 114.1 points, the highest in three years while Consumer Sentiment Index (CSI) recorded 80.7 points, peak in ten months.
“We opine the improved performances in both sentiments are the result of spillover effects derived from strong export performance and recovery in commodity prices.
“Therefore, we firmly believe that Malaysia’s economic growth for the second quarter will continue registering above five per cent given that rising optimism level in the economy as reflected in MIER’s business and consumer survey results,” it said.
MIDF Research said it expects exports will continue to perform well in the second half of the year, to be driven by continued broadbased recovery in global trade and stable commodities prices.
For the first time in 12 months, exports grew higher than imports, 32.5 per cent year-on-year versus 30.4 per cent year-on-year, respectively.
MIDF Research said based on current momentum, average value of exports for the past five months is at RM75.6 billion while 2016’s monthly average was at RM65.5 billion.
Besides that, MIDF Research said it maintained its Index of Industrial Production (IPI) growth forecast at 5.3 per cent, expecting Malaysia’s industrial production to remain stable with upward bias.
It said May’s IPI figures saw an improvement with an exception to the mining sector falling short from last month’s figure of 2.3 per cent year-on-year contraction which mainly due to the decline in crude petroleum production.
Manufacturing and electricity both experienced tremendous growth of 7.2 per cent year-on-year and 2.5 per cent year-on-year, respectively.
Besides that, MIDF Research said it foresees Malaysia’s inflation to grow moderately for the second half of 2017 given that cost-driven factors are tapering off.
It said headline inflation rose by 3.6 per cent in May, the lowest in five months.
On monthly basis, it said headline inflation continued a downward trend for four consecutive months, mainly due to tepid pace in fuel and transport prices.
Apart from that, MIDF Research said core inflation stable at 2.5 per cent while food and non-food inflation rose slightly lower than the previous month by 4.3 per cent and 3.2 per cent, respectively.