KUALA LUMPUR: Going into 2018, a key macroeconomic theme is the outlook of "benign normalisation and unsynchronised unwinding" in major central banks' monetary policies, said Maybank Investment Bank Research.
In its 2018 outlook report, the research firm said key risks in the new year are inflation and financial stability with the former altering major central banks' policy outlook and triggering "repricing" in global financial markets.
"China’s on-going “de-leveraging and de-risking” process also warrants close monitoring as our baseline case of growth soft-landing could instead turn into hard landing as data show sharp slowdowns in credit growth, shadow banking activities and property prices, as well as crackdowns on stock market speculations and local government debts," it added.
However, Maybank IB Research believes global growth will continue into next year.
"We expect global growth momentum to be sustained in 2018, expanding at +3.6%, the same pace as 2017, on the back of synchronized expansions of G3 economies.
"The G3-led global economic growth fuels world trade growth which is positive for ASEAN economies as we see spillover to domestic demand from export recovery," it said.
For Malaysia, the research firm expects continued over 5% real gross domestic product growth in 2018, driven by continued growth in private consumption, public consumption and gross fixed capital formation and expansion in both private and public investment.
"These reflect Budget 2018’s consumer spending stimulus measures and increased Government spending, as well as progress and rollout of major infrastructure and investment projects as the country heads for the 14th General Election which we see taking place between Feb 2018 and Apr 2018."
Maybank IB Research also expects the ringgit to continue its momentum with end-2018E forecast of 3.95, which reflects the currency's undersold and undervalued situations in view of favourable fundamentals and flows.
The research firm cites the rebound in oil prices, sustained current account surplus, progress in fiscal consolidation, rebuilding of external reserves, receding foreign holding risk in the bond market and resumption in export earnings repatriation in addition to the expects 25 basis point hike in Bank Negara's overnight policy rate post-election.
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