UOB: GDP growth to edge up to 4.7% in Q4 2018
KUALA LUMPUR: Malaysia’s gross domestic product (GDP) growth is likely to edge up to 4.7% in the fourth quarter (Q4) of 2018, from the 4.4% reported in Q3, in line with Bloomberg’s market consensus, according to United Overseas Bank (M) Bhd (UOB).
The bank said the growth would be mainly driven by domestic private sector spending and exports.
In a statement, UOB said the services and manufacturing sectors continued to be key contributors to growth.
“Meanwhile, construction was aided by a resumption of government spending and the mining sector by an uptick in crude petroleum and gas production.
UOB said regional growth trends, generally, leveled off towards the end of 2018, but there was renewed caution on the global economy due to weaker corporate earnings and slower manufacturing activity, the lack of clarity on US policy and lingering US-China trade tensions.
“The prolonged uncertainty is dampening consumer and business sentiment and thus, posing downside risks to growth,” it added.
UOB said this was reflected in the dovish tone of many central banks that mirrored a shift in the US Federal Reserve’s stance.
It said several regional central banks had kept policy rates unchanged after several hikes last year.
“India became the first country to cut rates last week, citing the slower growth environment and tame inflation.
“Although there are growing calls for more policy rate cuts in the region, Bank Negara kept a neutral tone and cuts in the overnight policy rate (OPR) are only moderately priced in the interest rate swaps,” it said.
UOB maintained its view on the OPR to remain on hold at 3.25% this year.
Meanwhile, it said the US dollar versus ringgit exchange had edged lower to 4.06/07.
“Near term, the greenback against the local note is likely to trade in a lower range between 4.05 and 4.10 before a subsequent recovery towards 4.15 and 4.18 by mid and end-2019, respectively. — Bernama