By RAHIMI YUNUS / Pic By BLOOBERG

Malaysia’s economic growth is expected to ease to 4.8% this year on the back of moderate exports projection and lower private investment, according to Socio-Economic Research Centre Sdn Bhd (SERC).

SERC ED Lee Heng Guie said external uncertainties including the trade war could temper the exports outlook in the second half of this year (2H18), and that the number would hardly match last year’s achievement.

“I think the export side in 2H18 will still be challenging as we are coming from a high export level last year. We saw some negatives in August’s numbers,” he said on the sidelines of the Real Estate and Housing Developers’ Association Malaysia briefing on the industry survey for 1H18 and market outlook in Kelana Jaya yesterday.

SERC projected the gross export growth for 2018 to be at 6.5% against the 18.9% re- corded last year, mainly driven by electrical and electronics products and higher crude oil prices.    

SERC’s overall estimate of 4.8% for GDP growth is slightly lower than Bank Negara Malaysia’s revised forecast of 5% from 5.5% to 6% previously.

RHB Research Institute Sdn Bhd has a similar estimate to the central bank at 5% GDP growth for this year, which is slower than the 5.9% registered in 2017, due to weakening external demand.

On private investment, Lee said he remains cautious for 2H18 despite significant acceleration in the second quarter of this year.

The think tank has estimated that private investment will grow 3.9% this year due to lingering uncertainties prior to the recent general election and the current transition period that led to a cautious approach among investors.

Lee hopes that the upcoming Budget 2019, which will be tabled on Nov 2, will provide clarity to investors and the business community, and subsequently be able to drive  investments.

It will be a tough balancing act for the Pakatan Harapan government and the budget needs to be a responsible and disciplined one, he added.

Among the proposed measures and initiatives by SERC for Budget 2019 are reploughing the foreign workers’ levy to an industrial fund to support automation and technology upgrading; reintroducing a RM100 monthly pass for public transportation; reviewing the effectiveness of the technical and vocational education and training; and incentivising rent-to-own housing programmes.

For 2019, Lee is looking at 4.7% economic growth, slightly lower than this year’s estimate, due to lower global growth projected at 3.7%.

He said the continued trade war and higher US interest rate will put pressure on capital flow and currency.

External pressure from the emerging markets could also affect the growth of Malaysia’s economy in 2019, he added.