News: Mega Projects To Drive Malaysia’s Economy In 2H 2019

Aug 19, 2019

Maybank Kim Eng Group economist Lee Ju Ye expects the economic growth of Malaysia for the second half of 2019 to be healthy, with ongoing mega projects driving the growth.

Among the mega projects underpinning growth for the long term include the Klang Valley MRT 2, the revived East Coast Rail Link (ECRL) and the LRT 3 project.

Read more: Check Out Some Of The Best Areas To Live Near The MRT Line In Kuala Lumpur!

“There are of course downside risks going into the second half and I think Malaysia will not be spared the China-US trade tensions. Export is still negative and consumer sentiment has been coming down a bit as well as the business sentiment,” she noted, reported Bernama.

“So, I think we’re quite cautious over the second half, because there is so much downside risks. But, having said that, Malaysia in the longer term, will benefit from all the investments and trade diversion coming from China-US trade conflict.”

According to her, the interest of international firms in relocating their operations in Malaysia would translate to positive export numbers going forward.

This could only mean that Malaysia has outperformed most ASEAN countries which had a slowdown in second quarter of 2019.

“Malaysia’s second quarter gross domestic product (GDP) was a surprise on the upside at 4.9 percent, higher than consensus estimates at 4.7 percent and I think this is positive news for the country,” said Lee.

“Among the areas driving growth is still private consumption which remains resilient and you have private investments doing better as well. I think Malaysia is seeing all the benefits coming from the China-US trade war to some extent.”

Commenting on the probability of an expected technical recession in 2020 because of the effect of the US-China trade war and economic uncertainties, she explained that the situation would not be as bad as it was in 2008, as no global financial crisis is involved.

“(The situation) would really depend on how things play out between China and the US over the next few months. We don’t expect to see a recession yet in 2019, but in 2020, it does look possible if the two countries continued to spar on trade as well the technology side.”

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“So, I think ASEAN will probably go into 2020 in a cautious mood, especially external oriented countries like Singapore and Thailand, and Malaysia to some extent.” she added.

Meanwhile, Maybank IB Research expects Malaysian equities to continuously show resilience despite a weak broader market environment, which was caused by a predicted moderation in global economic growth and the escalation of the US-China trade dispute.

 

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Nicholas Kong
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Dutama Properties
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