By Andy Heong
Malaysia’s real gross domestic product (GDP) growth is likely to expand by 5.8% year-on-year (y-o-y) in 2014 and 5% next year, said Affin Hwang Capital.
In a note today, the research house said the estimation was made after taking into account the strong expansion of 6.4% registered in the first half of 2014.
It said domestic demand would continue supporting the growth, although demand is expected to slow down slightly in the first half of 2015 (1H15).
“Real GDP growth is projected to slow from 5.3% y-o-y in the second half of 2014 to 4.5% in 1H15, before recovering to 5.5% in 2H15.
“Malaysia’s economic growth is unlikely to slow down sharply in 2015, given that the global economic slowdown is not synchronised, where some advanced economies would benefit from lower global oil prices,” it added.
Affin Hwang Capital opined that the slowdown envisaged in 1H15 is on account of a higher base effect in 1H14, but, believed the pace of economic momentum would improve in 2H2015.
Another research firm, Kenanga Investment Bank Bhd said for the whole of 2015, Malaysia’s GDP is projected to grow at a slower pace of 5.1% from an estimated 5.8% in 2014.
It noted growth in 2015 would be fraught with challenges, largely due to the effects of uncertainties coming about from the implementation of the Goods and Services Tax (GST).
“Malaysia’s domestic economy on the other hand is expected to experience a relatively sharp spike in consumption in the 1Q15 as businesses and consumers prepare for the implementation of the GST.”
“The following quarters, however, will see limited spending as the economy acclimatises itself to the new tax system,” it said.
Kenanga said lower crude oil prices, however, should help mitigate things, by providing some extra spending money for consumers, while cushioning the impact of the GST.
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