KUALA LUMPUR, Aug 19 (Bernama) -- Research firms have maintained Malaysia’s 2019 gross domestic product (GDP) at 4.5 per cent amidst continuous downside risks arising from the protracted global trade tensions weighing on global growth and resulting in weak external trade for the country.
RHB Research said the downside risks was likely to persist into 2020, following the escalation of the trade tension between the United States (US) and China recently.
It said the US would likely not be retracting its decision to impose a 10 per cent tariff on part of the remaining US$300 billion imports from China, effective Sept 1.
“The other part of it will likely start on Dec 15, and China has vowed to retaliate,” it said in a note today.
Given the cautious tone and downside risks emanating from the worsening trade tension, RHB Research said another cut in the overnight policy rate (OPR) by Bank Negara Malaysia (BNM) was likely as a preemptive move to support growth.
“This may happen in the late fourth quarter of 2019 (Q4 2019) or Q1 2020. BNM will likely wait for FTSE Russell’s review in September before making its move,” it added.
Meanwhile, Kenanga Research expected the underlying strength for the Q2 2019 economic growth to be rather short-lived and that the growth would moderate in the next quarter onwards as downside risk intensifies.
“With trade developments expected to constantly swing between escalation and de-escalation of trade tension, global uncertainty and financial market volatility in the near term would be elevated, potentially resulting in delayed investment decisions globally.
“These external factors would weigh on Malaysia’s growth prospect, albeit partially weathered by domestic activities, particularly through the revival of mega infrastructure projects which would provide spillovers to the private sector activities,” it added.
Kenanga Research revised its forecast for the Q3 2019 growth upward to 4.4 per cent from 4.2 per cent previously and revised the Q4 2019 growth down to 4.0 per cent from 4.7 per cent previously, while maintaining its whole year projection at 4.5 per cent.