KUALA LUMPUR: CIMB Investment Bank Bhd is projecting a 4.6 per cent growth in Malaysia’s gross domestic product (GDP) for 2019 driven by private consumption and investment.
Treasury and markets group head Chu Kok Wei said the conservative projection was mainly due to the short term external volatility, in particular China and the US trade war.
“Where the financial market looks towards to is the follow through of quite a bit of policy changes that was announced (by the government). Those will be a lot more medium term.
“GDP number sometimes depends. We (Malaysia) are rather an open economy. So the elephant in the room is what happening between China and the US.
“Those can cause short term volatility, affect GDP numbers and economic growth," he told NSTP Group in an interview on the sidelines of Malaysia: A New Dawn 2018 Investor Conference here on Tuesday.
He said more importantly, what the government should do in the medium term is to ensure policies and reforms to follow through and sticking to fiscal consolidation, and structural reforms to education and labour market.
For 2018, Chu said the bank has a projection of 4.9 per cent GDP growth for Malaysia.
On the bank side, Chu said CIMB is seeing improvement in corporate loans growth starting the third quarter (Q3) of the year, as the government provide more clarity on its policies, despite several recent deferment or cancellation of mega projects.
He said corporate loans growth recorded in Q2 was due to the fact that businesses are taking a 'wait and see' stance awaiting more clarity on the market before they make any major decisions, such as capacity expansions, especially after the 14th General Election.
“We do see corporate financing activities pick up after slowdown in Q2. The policy direction helps, partly.
“Some of these activities are replacement of capital expenditure. Quite a fair bit of it are activities in regards to replacement of manufacturing capacity, plants and machineries.
He further said CIMB is also see more activities from oil and gas segment, but this is also affected by the volatility in oil price.
Meanwhile, Chu said the bank is positive on Finance Minister Lim Gan Eng’s remark that the government is reducing its direct participation in the equity ownership of companies so that the private sector can take the lead.
“As indicated by the Finance Minister himself, there should be declining of government’s activities in the economy and I think the government want to stick with that plan - that it should be led by the private sector.
“Most activities should be driven by the private sector who can then go to the government for the right and conducive policies.
“That is a great idea rather than saying that businesses used to complain that they are not getting enough economic activities like in the past,” he said.