KUALA LUMPUR: OCBC Bank expects Malaysia’s gross domestic product (GDP) to grow 4.4 per cent this year.
OCBC economist Alan Lau said the current data print continued to indicate slow momentum in the Malaysian economy for the coming year amid the uncertain and weak global trade environment.
Lau said Bank Negara Malaysia’s rate cut last week may be viewed as a pre-emptive measure to this slowdown.
He said at this point, OCBC did not expect further cuts this year barring signs pointing to an even bigger downturn in growth.
The first quarter’s GDP growth of 4.5 per cent year-on-year was just slightly above the bank’s forecast at 4.4 per cent and the Bloomberg median consensus forecast at 4.3 per cent.
Lau said as economic concerns and government consolidation would likely continue for the rest of the year, the bank was still expecting investment to come out weaker.
“That said, the government did recently announce that the East Coast Rail Link and Bandar Malaysia projects would be carrying on and this may provide a boost to the economy but there is still no certain details on when it would actually restart,” he said.
Lau said mining and quarrying was the only sector to see a decline, at 2.1 per cent year-on-year amid production disruptions to the sector.
“There are also additional concerns going forward that the sector may still face a number challenges as recent news reports have highlighted that there will be maintenance works on fields offshore Sabah in addition to a temporary shutdown of the Sabah-Sarawak LNG pipelines.
The construction sector experienced a slowdown in growth at 0.3 per cent year-on-year.
The other sectors were broadly stable with the exception of agriculture, which saw a pick-up 5.6 per cent year-on-year, although this sector alone would not be able to sufficiently boost the country’s growth, he said.
On weaker trade volumes, Lau said this was unsurprising given the subdued global trade situation and production weaknesses in the mining sector.
“There are also rising risks to the external environment given the escalating trade tensions although Malaysia to some extent may still be able to benefit from substitution effects. Net exports though was a positive contributor to growth,” he said.