KUALA LUMPUR: Standard Chartered foresees a steady but lacklustre growth for Malaysia in 2020 with the country’s gross domestic product is projected at 4.5 per cent similar to 2019 while the ringgit to trade at 4-4.1 against the US dollar from 4.1-4.2 last year.
It’s ASEAN and South Asia Global Research chief economist Edward Lee said consumption should remain as the main growth driver, even though the pace of spending may ease due to the high base effect factor.
"The labour market remains healthy although there are some early signs of softening," he told reporters at a research briefing here today.
Asked if the country needs to move away from domestic consumption as one of the growth drivers, Lee said it is not only Malaysia but it should be a concern at the global level.
On the current trade truce between the United States and China, he replied the market would still be in a cautious mode despite the positive development.
"… with the trade truce, we foresee investment to come back to Malaysia and we will be on track for the fiscal position," he said, adding that the government is still on fiscal consolidation trajectory, which explained the lack of spending seen.
Nevertheless, the investment may recover slightly in 2020, amid de-escalation in the trade war and the resumption of public infrastructure projects.
Stanchart, according to him, expects Bank Negara Malaysia (BNM) to keep its key interest rate on hold in 2020 but see a risk of a 25 basis points rate cut.
"Despite an expected rise in inflation (albeit still benign) in 2020, the central bank is likely to maintain its focus on growth, which has been slowing on a sequential basis since the fourth quarter 2018.
"We expect BNM to adopt a wait-and-see stance for now. The external sentiment is expected to pick up, while domestic consumption has held up. The resumption of large infrastructure projects should also support investment activity," he said.