MALAYSIAN ECONOMIC OUTLOOK: STABLIZING BY FOURTH QUARTER-2020
Chief Economist, Juwai IQI, Shan Saeed - Malaysian GDP for next year should stand between 4 and 5 per cent with macro-economic stability back in action
By Tengku Noor Shamsiah Tengku Abdullah
KUALA LUMPUR, Sept 22 - Despite the uncertainty in the global economy following Covid-19 pandemic outbreak, Malaysia is coming back in the market with its broader economy approaching to its normal trajectory, said an analyst.
Juwai IQI Chief Economist Shan Saeed said Malaysian domestic demand is getting stronger and consumers are on the buying spree.
Juwai IQI is a brokerage house with strong presence in ASEAN. Offices in 15 countries with over 12000 real estate agents
"The government has been able to maintain macroeconomic stability which is significant in keeping confidence in the economic outlook. Malaysian GDP for next year should stand between 4 and 5 per cent with macro-economic stability back in action, he said when sharing his insights on the Malaysian Economic Outlook.
Backing his positive outlook on the country's economy, Shan said the manufacturing sector and real estate are picking up, while luxury car sales rose by 3 per cent.
Saying that the stability of global economy becomes obscure, Shan said few analysts suggested that global economy will have V or W shaped recovery but they failed to fathom the impact of the deep recession entering into the market.
Term coined by THE ECONOMIST magazine, Shan said, 90% economy revisited analyzed the impact of Covid-19 on the advanced economies.
"Social distancing measures continue to reduce 7-8% of global GDP outlook. The variation in the economic performance between countries is more striking. It is common for growth rates to diverge in downturns.
"The world biggest economy USA is heading for deep L-shaped recession. Dollar is heading for tail end risk and is moving towards south. The US Federal Reserve has created two tail end risk. One is deflation and other is inflation," he said.
According to Juwai IQI, Shan said, "we have predicted that aggregate demand remains slow in advanced economies but high in ASEAN and in China.
He said that is because the economic confidence is coming back into the region, with young demographics having purchasing power,.
It is also due to the modern infra-structure and convenience as well as strong labour productivity.
Shan said Asia is the future growth engine to lead the global economic recovery.
"China will lead the growth as its aggregate demand remains strong where goods have bounced back fast and global factories are making grounds.
" Although the services sector such as restaurants, hotels and travels are down and out at the moment, but will be gaining strength in the next 2-3 quarters as domestic tourism and travel gain momentum.
Meanwhile, touching on the ringgit, Shan said Bank Negara Malaysia (BNM) has played its cards very smartly despite tough market conditions in the global financial markets.
He said the local currency has appreciated 7.5 per cent against US dollar since March 23-2020.
Ringgit movement against dollar during the year stood at;
Jan 1-2020 - 4.05
March 23-2020 - 4.44
June 16-2020 - 4.27
Sept 17-2020 - 4.13
Shan said the central bank has played its card very prudently as exogenous variables are getting unpredictable.
"BNM has used monetary policy very effectively to keep the ringgit movement as per the market determined forces. The fair market value of Ringgit/USD for Q-4/2020 is 4.00 to 4.15. It will play its role when its required in the market, " added Shan.
-- ends-
