OCBC Bank Global Treasury Research Research and Strategy said Malaysia would most likely hold the overnight policy rate at 3.25 per cent for the rest of the year to support economic activity.
KUALA LUMPUR: OCBC Bank’s Global Treasury Research Research and Strategy has retained its forecast on Malaysia’s 2016 gross domestic product (GDP) at 4.4 per cent.
“Given the resilience of private spending in the first quarter of the year (1Q16), it is not too surprising to see Bank Negara Malaysia (BNM) remaining relatively sanguine about Malaysia’s growth prospects,” it said in its 2016 Global Mid-Year Outlook report yesterday.
It said Malaysia’s household consumption grew by 5.3 per cent year-on-year (y-o-y) in 1Q16 compared to a 4.9 per cent in 4Q15.
“The new BNM Governor Datuk Muhammad Ibrahim was reported as saying that the economy remained on track to expand by 4.0-4.5 per cent this year, something that we agree in keeping to our 4.4 per cent forecast,” it said.
Meanwhile, the research house said Malaysia would most likely hold the overnight policy rate at 3.25 per cent for the rest of the year to support economic activity.
“Unless export numbers deteriorate massively, or the much-touted domestic consumption uptick gets derailed somehow, the central bank will most likely hold at 3.25 per cent for the rest of the year,” it said.
Malaysia’s exports growth showed a 0.5 per cent y-o-y contraction in 1Q16 versus an already-challenged 0.6 per cent growth in the previous quarter.
The fall was mainly driven by an challenging external environment such as the slowdown of China’s economy, it said. — Bernama