The research house is reducing its investment due to the halt of several mega infrastructure projects

By SHAHEERA AZNAM SHAH / Pic By BLOOMBERG

Malaysia’s gross domestic product (GDP) growth is expected to ease to an annualised 5.2% in the second quarter (2Q) of 2018 from 5.4% the previous quarter, said Standard Chartered Global Research (StanChart).

The research outfit noted in a report yesterday the moderation in the 2Q is supported by the tax holiday period, which began on June 1 and ends Aug 31, as well as election campaign spending.

“The factors may have boosted private spending in June. Election campaign spending from late April to early May could also have contributed to the 2Q GDP growth,” StanChart’s report stated.

The GDP statistics for the 2Q performance is expected to be released by the Department of Statistics Malaysia on Aug 16, 2018.

According to the research house, lower palm oil production — along with the halt of several mega infrastructure projects — may also have affected the growth of the GDP.

“Palm oil production fell 6.4% year-on-year (YoY) due to lower crude palm oil prices after five consecutive quarters of a price increase.

StanChart said the growth in GDP is likely to be more reliant on private consumption as the research house maintains its 5.3% GDP growth forecast for the year.

“The growth for the year may be more reliant on private consumption than before, supported by the tax holiday during the 2Q and 3Q, as well as a healthy labour market.

“Household consumption rose 7% YoY, but it may be weighed down by property prices and the high household leverage,” it said.

StanChart is reducing its investment due to the halt of several mega infrastructure projects and as impact from trade tension continues.

“We estimate a small positive output gap at the moment, but the risk scenario is biased towards the downside and monetary policy loosening if trade tariffs expand beyond the current US$50 billion (RM205 billion) of goods,” it said.