KUALA LUMPUR: Persistent economic headwinds, internal and external, will likely continue to be major concerns for Malaysia in the first half of this year, affecting consumer sentiment and business confidence, says AllianceDBS Research.
These economic headwinds include the COVID-19 outbreak and the recent political turmoil in the country, it said today in a note.
“Given the myriad of economic challenges arising from internal and external uncertainties, we believe there will be more downside risks to the economy which could prompt more monetary easing by Bank Negara Malaysia (BNM) in the near term.
“We believe consumer sentiment and business confidence will remain weak following the recent domestic political turmoil, negatively impacting private spending which has long been the main driver for growth in Malaysia,” the research firm added.
AllianceDBS Research said balancing the needs between fiscal prudence and stimulus spending might be a herculean task for the new government given Malaysia’s continuous fiscal deficit and elevated government debt.
It noted that with Tan Sri Muhyiddin Yassin taking over as prime minister, “the appointment of new heads of government agencies is expected in the next few months after a new government cabinet is formed.
“This could lead to major changes in government policies and reform initiatives that were implemented under the previous government.”
Meanwhile, OANDA senior market analyst for Asia-Pacific Jeffrey Halley said Malaysia’s growth story would continue to be hindered by domestic political uncertainty and global uncertainty in the form of the COVID-19 outbreak.
“Until measures (to tackle them) occur, it is hard to construct a bullish case for above-trend growth,” he added. – March 3, 2020, Bernama
