Wednesday, 5 July 2017

(NST) M'sia growth projected to hit 5pct this year: SERC

KUALA LUMPUR: Socio-Economic Research Centre (SERC) said Malaysia’s overall economic growth projection will hit 5 per cent this year, in line with the improvement in export, private consumption, and private investment.

SERC executive director Lee Heng Guie said the country’s gross domestic product (GDP) recorded a stronger traction of 5.6 per cent in the first-quarter 2017, lifted by sturdier domestic demand and higher exports.

“This marks the strongest quarter growth in almost two years since second-quarter of 2015. Nevertheless, it remains to be seen whether the strong Q1 GDP growth can be sustainable in the remaining quarters given dissipating favourable base effects,” he said at a media briefing on the quarterly economy tracker here, today.

Lee added the growth is broad-based spurred by domestic demand particularly in private sector expenditure and strengthening external demand.

“Gauging from a slew of latest available economic and financial data indicators and data, the sustained high demand for consumer and trade-related services, and continued expansion of the manufacturing, construction and agriculture sectors should continue to underpin economic growth,” he said.

He said the ratio growth debt to GDP shrunk to 50.2 per cent in Q1 from 52.7 per cent recorded in December last year.

He reckoned the macroeconomic fundamentals should also continue to support growth and government should reduce its spending on expenditure rationalisation like in public sector pension reform and rightsizing civil service.

He said the inflation rate decelerated by 3.9 per cent year-on-year in May due to moderating transport prices.

“Though the headline inflation readings will moderate in second-half this year, the pace of price increases will depend on the volatile global crude oil prices,” he said.

SERC estimated inflation to increase between 3.5 per cent and 4.0 per cent this year.

“Monetary policy must be well calibrated to support growth and anchor inflation expectations while mindful of global financial conditions.

“Bank Negara Malaysia’s policy rate will remain steady at 3 per cent this year,” he said.