UOB: Nation’s GDP to expand 4.8%, economy to remain resilient in 2019

The bank says govt is taking the right steps to ensure that Malaysia stays competitive in the region and across the world

By NUR HAZIQAH A MALEK / Pic By TMR File

Malaysia’s economic outlook for 2019 is expected to remain resilient despite expectations of external risks from global trade disputes and increasing market volatility, according to United Overseas Bank (M) Bhd (UOB Malaysia). The bank also projected the Malaysian GDP to expand 4.8% this year and in 2019.

UOB Malaysia senior economist Julia Goh said the government’s effort to focus on advancing high value-added sectors such as technology- intensive industries and accelerating the digital transformation of the manufacturing sector through its Industry 4.0 initiative and targeted infrastructure spending would ensure Malaysia’s competitiveness in the region.

“These are the right steps to ensure that Malaysia stays competitive in the region and across the world. We project real GDP to expand 4.8% in 2018 and 2019,” Goh said in a statement yesterday.

UOB expects the ringgit to move in tandem with other Asian currencies amid the volatile external environment and trade conflict.

Goh said despite the ongoing US Federal Reserve interest-rate increases lifting the US dollar and the volatility in global oil prices, the bank expects pressure on the ringgit to materialise at a gradual pace.

“The government’s efforts to build a more transparent government, the economy’s underlying strengths, steady economic growth, low unemployment and a surplus current account, will help support the ringgit,” she added.

Acknowledging that Malaysia is not immune to the global headwinds, Goh, however, believes that robust domestic private consumption and investments will cushion the economy.

“The recent Budget 2019 announcement delivered some positive fiscal measures to reinforce consumer spending, promote inclusiveness and boost growth.

“Private consumption is expected to be supported by higher minimum wages, targeted cash aid and petrol subsidies. The repayment of tax refunds is also likely to improve cashflows for the private sector and encourage domestic spending,” she said.

The US-China trade tensions will continue to pose greater risks to export-driven countries like Malaysia.

“Given these developments, we expect the impact of broadening trade measures resulting from the trade tensions will be felt more materially in 2019,” Goh explained.

According to the bank, Malaysia’s economy will benefit from the government’s effort to improve transparency and accountability over the long term.

“The country is also likely to benefit from regional and multilateral trade initiatives, which will enhance its resilience against rising global trade protectionism risk,” it said.

It added that Malaysia is projected to continue on its growth path given its strong basics and ongoing policy reforms to stimulate growth over the medium term.