RHB maintains Malaysia’s GDP growth at 5.4 pct despite cuts by int’l institutions

KUALA LUMPUR: RHB Banking Group maintained its forecast for gross domestic product (GDP) growth at 5.4% for the Malaysian economy this year, due to an expected moderate recovery in consumption in the second half of the year (second half).

The group’s chief economist and head of financial market research, Dr. Saylesh Jha, said the forecast in January remained unchanged despite many significant downgrades from international organizations.

“We do not trust the idea of ​​the World Bank or any other international organizations that we record growth (GDP) below 5.0%.

“Consumer (spending) is on track for a decent recovery in the second half of the year,” he said today during the virtual third quarter of 2021 “Global Market and Economic Outlook”.

Silesh said it was hoped that movement restrictions could be eased sometime in mid-July, given the positive changes in the country’s vaccination program and a possible decrease in daily infections.

In terms of foreign exchange, he expected the US dollar to continue to rise over the long term, reflecting the rise in the yield on 10-year US Treasuries (UST10YR) in the second half of 2021 – averaging about 1.7-1.8 percent in the third quarter. current year. this year and 1.8-2.0% in the fourth quarter.

Thus, the ringgit was expected to fall in the range of 4.15 to 4.20 against the US dollar in the near future, while the local currency is likely to hover around 4.30 in the first quarter of 2022. he said.

However, a weaker currency situation will give Malaysia a favorable export position, he added.

On the global front, Silesh expected looming uncertainty ahead as the US Federal Reserve was likely to make a political mistake and lag behind inflation and employment growth.

He said the central bank’s messages were vague and too nuanced, confusing fixed-income markets.

Consequently, there is a possibility that the central bank will have to sharply change the direction of policy, instead of making a smooth transition, he said.

“With the onset of looming uncertainty about the US Federal Reserve, inflation, labor market conditions and the growing risks of continued net outflows from emerging markets, it is recommended to increase exposure to alternative assets and cash risks.

“In Malaysia, we prefer financial assets related to the topic of consumer recovery,” he added. – Burnama