Malaysian economy to grow at 4% in 2017

Pics of Westports in Pulau Indah. AZMAN GHANI / The Star Budget - PPR flats for Budget story.

PETALING JAYA: The Malaysian economy is forecast to grow at a pace of 4% in 2017, strengthening to 4.4% in 2018, said IHS Global Insight chief economist for Asia Pacific Rajiv Biswas,

Improving global growth and the competitive ringgit should provide some support for Malaysia’s export-driven economy, he said, adding that with exports of petroleum products benefitting from higher average world oil prices. 

“The average price of Brent crude is expected to rise from US$44 in 2016 to US$58 in 2017. Malaysian manufacturing exports grew by 2.6% year-on-year in the first eleven months of 2016, with electrical and electronic products up 3% and chemical products up 5.8%. 

“A positive factor for the Malaysian export sector in 2017 is that the US economy, which is Malaysia’s third largest export market, is expected to grow more rapidly. Malaysian merchandise exports to the US measured in ringgit terms showed positive growth in 2016, up 9.7% year-on-year in the first eleven months of 2016,’’ Rajiv noted. 

The Asean region , he said is expected to benefit from a moderate improvement in global gross domestic product (GDP) growth from 2.4% in 2016 to 2.8% in 2017, with the US economy forecast to strengthen in 2017, supported by the incoming Trump Administration’s plans for deep corporate tax cuts and a boost to infrastructure spending. 

This should provide a boost to the region’s exporters as the US remains a key export market for many Asian nations, including Singapore, Malaysia and Thailand, he said in his commentary on the Asean Economic outlook in 2017.

According to IHS Global Insight, Asean tourism sector exports should also continue to benefit from strong growth in Chinese tourism visits, with Chinese tourist visits to Thailand having risen from 7.9 million in 2015 to an estimated 8.8 million in 2016, while Chinese tourist visits to Cambodia were estimated to have risen by 20% in 2016. 

“Chinese tourism visits to Malaysia are also expected to strengthen, helped by the e-visa (electronic visa) scheme introduced since March 2016. Chinese tourism visits to Malaysia have surged in 2016, rising by 26% in the first eight months of 2016, with further strong growth expected in 2017, helped by the extension of the e-visa scheme as well as the significant increase in direct flights between Malaysia and China by Chinese airlines as well as Malaysia Airlines and AirAsia,’’ it said.

Rajiv said many countries in South-East Asia are expected to benefit from China’s ‘One Belt, One Road’ initiative over the medium term, which will help to accelerate infrastructure development and regional transport connectivity, facilitating the development of the Greater Mekong Sub-region as a new global manufacturing hub. 

China has also made significant bilateral trade and investment deals with a number of Asian developing countries, including Malaysia and the Philippines, he added.