Malaysia’s investment growth to increase to 4.5% in 2017

KUALA LUMPUR: Malaysia’s investment growth is expected to accelerate to 4.5% in 2017 from 4.3% this year on improved currency competitiveness and a gradual pick-up in world trade.

The Institute of Chartered Accountants in England and Wales (ICAEW), announcing part of the content of its latest Economic Insight: South-East Asia report, said the country’s recent improved competitiveness had meant increased trade flows, job creation, business investment and consumer spending.

“The improved currency competitiveness and a gradual pick-up in world trade will moderate drag from exports, supporting a slight acceleration in gross domestic product (GDP) growth next year, from 4.3% in 2016 to 4.5% in 2017,” it said in a statement.

ICAEW South-East Asia regional director, Mark Billington, said Malaysia was well-placed for financing investment spending in the years ahead. 

“Monetary policy rates remain low by historical standards at 3%, but external debt could be a worry as it is particularly exposed to exchange rate movements,” he said. 

Billington said in order to support Malaysia's investment and growth in the medium term, the Government will need to ensure that credit supply remained sustainable and was channeled to the most productive sectors.

According to the Oxford Economics Control Risks Economic and Political Risk Evaluator, Malaysia overall scored better than most of its South-East Asian counterparts on economic and financial risk metrics.

The areas of improvement included improving the business environment and accelerating reform implementation, it said.

The report also said the economic prospects for the Asean region remained positive, with a steady recovery in world trade supporting export prospects and public investment playing a key role in several economies.

However, strong trade and financial ties with China meant it remained a crucial driver of fortunes in the Asean region. 

A sudden slowdown in China would have a major impact in Asean, it said.

ICAEW economic advisor/Oxford Economics lead economist, Priyanka Kishore, said firms would need to maintain a solid pace of capital expenditure to ensure business opportunities were not lost.

“We expect investment growth to accelerate in 2017 in Indonesia, Malaysia and Singapore, and ease only modestly in Vietnam,” she said. - Bernama