KUALA LUMPUR: There is a good chance Malaysia's economy will stabilise in the second half of this year as there is a possibility the price of global benchmark, Brent crude, will rebound, said OCBC Bank (M) Bhd chief economist Selena Ling.
"Malaysia is expected to post a growth rate of 4.7% in 2016 as the oil prices could rebound by between US$45 and US$50 per barrel in the third and fourth quarters, respectively.
"This is broadly in line with what the economy is on course to achieving in 2015, which is a growth rate of 4.8%," she told a media conference on 2016 economic outlook in Kuala Lumpur on Friday.
Apart from that, she said, export resilience has contributed to the relatively stable growth and this, coupled with the correction in imports, had lifted the export strength and resulted in a relatively robust trade balance.
The high proportion of electronics exports, which commanded 25% of total exports, has helped buffer the ongoing slump in exports of commodities such as natural gas, she said.
Earlier, in her presentation, Ling said, private consumption has slowed to 4.1% in the third quarter of 2015 from 6.4% in the second quarter while government spending has also eased to 3.5% from 6.8%.
However, there would always be risks like the plunge in crude oil prices, volatility in both major currencies and emerging markets, alongside Federal Reserve's lift-off again this year, she said.
"Nonetheless, oil price is likely to remain in the doldrums in the near term and the Organisation of the Petroleum Exporting Countries appears to have relinquished its role as an automatic stabiliser for cutting supply when there is a global oil glut have renewed the concerns about global growth," she said.
Ling said these factors would continue to be the catalysts for investors and businesses across the globe.
Apart from the concern about oversupply, renewed concerns about global growth had also added to worries that there would be less demand for oil to power the economy as well, she said.
On the ringgit, she said, it was expected to fall further to 4.5% the US dollar later this year as the dollar will strengthen against the basket of currencies due to Fed's moves in raising the interest rate.
"Based on the historic study on the dollar's pattern and Fed policy normalisation, there are times when the dollar increases dramatically and there are times when it does not respond aggressively as it depends on the cycles of interest rate increase," she said. - Bernama
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
