KUALA LUMPUR: Malaysia can expect a rough start in 2020, based on its latest economic performance, according to some global investment banks.
They said while Malaysia was still pushing through despite the global uncertainties, the gross domestic product (GDP) growth in the third quarter (Q3) suggested that there could be some slowing especially in private consumption next year.
Standard Chartered Bank said Malaysia's 3Q growth had moderated to 4.4 per cent from 4.9 per cent a year ago.
“While the print was in line with our expectations, sequential growth slowed below one per cent to register 0.9 per cent quarter on quarter seasonally adjusted. This is the third consecutive quarter of lacklustre growth,” StanChart said in a recent report.
“Quarterly expansion has averaged one per cent quarter on quarter (seasonally adjusted) so far in 2019, versus an average 1.3 per cent from 2012-2018,” it added.
StanChart pointed that public investment had fallen for the eighth consecutive quarter, by 14.1 per cent.
Meanwhile, exports fell 1.4 per cent year-on-year in Q3, the first since Q3 2016, even as net exports contributed to overall GDP growth.
StanChart said a potential bottoming out, but no strong recovery, of global growth may improve onshore growth sentiment.
“We estimate that the Malaysian economy may run close to zero potential growth in 2020. However, downside risks remain and could turn the output gap negative,” it added.
J.P. Morgan is a bit optimistic in its assessment, saying the Q3 growth was higher than its expectations.
It pencilled in some near-term external demand tailwinds.
“We continue to look for some slowing in private consumption, which has been the dominant driver of growth since 2018, next year in the absence of the one-off tax and income rebates to households that facilitated growth in first half of 2019.
“However, as Malaysia's overall activity in part reflects external developments, the stabilisation in global capex indicators in the coming quarters could bring external demand tailwinds for the Malaysian economy,” it said.
J.P Morgan maintained its 25 basis point policy easing call at Bank Negara Malaysia’s Monetary Policy Committee meeting in March.
Overall, the bank revised up its 2019 growth forecast to 4.4 per cent from 4.3 per cent previously, and 2020 growth to 4.1 per cent from 3.8 per cent.