OCBC Bank sees moderate growth in Malaysia in 2019

28-Jan-2019 Intellasia | NST | 6:00 AM Print This Post

OCBC Bank (Malaysia) Bhd expects Malaysia to see smaller gross domestic product (GDP) growth this year at 4.4 per cent, driven mostly by domestic consumption.

This, according to OCBC Bank chief economist Selena Ling, was in line with the moderate global growth prospects on the back of a United States Federal Reserves (the Fed) rate pause and less antagonistic US-China trade tensions.

“Private consumption is again expected to remain the main anchor of growth, supported by government social transfers, stable labour market conditions and moderated inflation,” she said.

“Ongoing fiscal consolidation would likely focus on reducing wasteful expenditure and improving spending efficiency.”

Ling also expects Bank Negara Malaysia to keep its key interest rate at 3.25 per cent this year.

“Inflation may accelerate to two per cent year-on-year in 2018, but with an expected negative output gap, there is no urgency to recalibrate monetary policy settings,” she said.

“A pause by the Fed implies no urgency for Bank Negara to hike and rate cut would require the ringgit to tread a firmer path against the dollar. As such, government bond yields had been relatively stable throughout 2018 and are likely to sustain in 2019.

OCBC Bank expects the ringgit to tread at RM4 to the dollar by the end of the year.

When asked if the ongoing tension between Malaysia and Singapore will spill over into bilateral trade, Ling said that this was an unlikely scenario.

“The government to government (G2G) situation now is a reflection on the global wave of pushback due to the growth in populism. This is not a situation that is unique here. Once, globalisation was looked at as a good thing, now not so much.

“Business-wise, there have not been that much a hit on either countries. Industries and businesses will go on as G2G ironed out the issues,” she said.

OCBC Bank is the second largest financial services group in Southeast Asia by assets.

Its key markets are Singapore, Malaysia, Indonesia and Greater China.



Category: Malaysia

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