Growth disappointment, fiscal slippage tipped for Malaysia in 2016

KUALA LUMPUR – Latest data for Malaysia confirms an economy where the balance of risks in 2016 is skewed towards growth disappointment and fiscal slippage, despite a firmer inflation print, according to a briefing note by ANZ Bank.

“We are not overly concerned about the uptick in inflation, as (that) trajectory should remain contained in spite of the weaker MYR,” ANZ says. “Benign global commodity prices, as well as waning domestic demand, should see inflation pressures absent.”
ANZ says Malaysia continues to be caught in domestic and external cross-currents stemming from reduced oil-related activity, lower domestic demand, and tighter fiscal spending.

“In addition to slower growth from private consumption, we are also monitoring the broad capex cycle for further downside risks due to the knock-on effects of structurally lower prices throughout the oil and gas industry,” the bank says.

“Tighter liquidity in Malaysia’s banking system, as evident in the moderation in broad money growth and rising funding costs, could pose downside risk to our 4.7% GDP growth for 2016.”   www.live.anz.com (ATI).