Malaysia to be growth laggard of the region

by **Cals** Wed 26 Nov 2014, 02:49

Malaysia to be growth laggard of the region

KUALA LUMPUR: Malaysia will generate the lowest economic growth in the region next year, said Etiqa Insuranceand Takaful head of research and head of products and alternative investments, Chris Eng.
He said Singapore, Thailand, Indonesia and the Philippines are expected to see growth in gross domestic product in 2015.
“Every other country is expected to rebound, particularly Thailand, only Malaysia would be the laggard next year with consensus forecasting growth at 5.1% to 5.2%,” he said at the 19th Malaysian Capital Market Summit yesterday.
This is a drop from the 5.8% growth originally predicted for the full year. The economy expanded by 5.6% in the third quarter of this year, from 5% a year ago, but lower than the 6.5% recorded in the second quarter.
“Equities may rally in the first quarter of next year, but thereafter upside may be constrained and may trend downwards in the second half of 2015. It could be a challenging year for investments,” said Eng.
Nevertheless, Eng pointed out that there are still positives for Malaysia’s growth, particularly in the Mass Rapid Transit project and Petroliam Nasional Bhd’s refinery and petrochemical integrated development project.
“Our market valuations are also still reasonable, with corporate earnings between the high single digits and low teens,” he said.
“The bad news is that with the goods and services tax being implemented next year, inflation should rise above 4%. Also, if there is continued downward pressure on oil prices, government revenue will come under pressure,” he said.
Earlier, Deputy Finance Minister II Datuk Chua Tee Yong said he does not expect falling oil prices to increase the country’s fiscal deficit as average crude oil price from January to October stood at US$108 per barrel — close to the government’s budgeted price of US$110 per barrel.
On the outlook for the sukuk market, CIMB Islamic Bank Bhd chief executive officer Badlisyah Abdul Ghani said while it would be mostly business as usual in Malaysia, one of the biggest challenges to the industry is knowledge.
“Although we are a leader in the sukuk space, the Malaysian market still relies on a select number of people who have an in-depth knowledge of sukuk and sukuk transactions,” he said.

This article first appeared in The Edge Financial Daily, on November 25, 2014.