KUALA LUMPUR: Economist Dr Yeah Kim Leng has said the International Monetary Fund’s (IMF) “thumbs up” is broadly in line with public- and private-sector expectations that the country’s economic performance will be better this year and that a key risk is a weakening in the global economy.
“The strengthening global economy has boosted Malaysia’s exports, particularly electronics and electrical products and primary commodities, which are experiencing improved demand and better prices this year.
“The spillover from strong exports to domestic demand has come at a propitious time as domestic consumption and investment growth weaken, especially in the first three quarters of 2016.
“Another boost to domestic spending is expected to come from a mildly expansionary budget for 2018 that will be announced towards the end of this month as the government heads to the polls,” he told the New Straits Times.
Yeah said a “goodies-full” budget was expected to address the impact of rising cost of living, high housing prices and food inflation facing the B40 and M40 households.
“IMF’s projection of a 3.8 per cent headline inflation for this year before tapering to below three per cent next year is consistent with market expectations that the spike in overall prices this year is a one-off phenomenon and should normalise next year, in line with the global inflation trend.”
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said concerns about external risks were valid as they could result in sudden changes in the current course, easily affecting Malaysia’s growth trajectory.
He was commenting on the recent IMF report that commended the resilience of the Malaysian economy, its policy responses against headwinds and risks and the current performance of the country’s exports, as well as ongoing infrastructure projects.
“At the moment, judging from the survey data, the Global PMI manufacturing index continues to suggest that businesses are quite sanguine with their outlook and consumer confidence in advanced countries is improving.
“Such dynamics should bode well for our exports.
“In addition, the implementation of key infrastructure projects would result in more activities in the construction, manufacturing and services sector.
“This would sustain domestic spending although consumers remain cautious in their spending habits,” he told the NST.