Malaysia’s healthy GDP growth and persistent inflation. Well..

My friend lost his managerial position when his company decided to move out of Malaysia a few months ago. Instead of panicking, he decided to take a break and has recently found a new job. Are there plenty of jobs? Well.. take a look.  I believe that when people are still queuing up for affordable units in good locations, it shows that the economy is still doing well enough and people still have jobs. The reason I say so is because for these affordable units, there are strict requirements and to buying these units with the hope to flip them is suicidal to say the least. The number of units are usually in the thousands and these are best bought for own-stay. On a longer term, with the help of the usual inflation, it will still be a good hedge. Always remember that Malaysia is not the most advanced nation in the world for the property market. If all the more advanced property markets continue to show price growth, Malaysia would just follow.

Let’s listen to what Bank Negara Malaysia (BNM) governor Datuk Muhammad Ibrahim said about the GDP growth of Malaysia for Q1 2017. “The economy is poised for better performance with the support of exports.” He added, “Our diversified economy will help us withstand domestic and external challenges.” In Q1 2017, our economy grew 5.6 percent. Two things helped; household spending and a recovery in exports helped by the higher oil prices. Private sector demand makes up 70% of GDP and this climbed 4.1 percent. Higher growth was recorded in services (5.8 per cent), manufacturing (5.6 per cent), mining (1.6 per cent), agriculture (8.3 per cent) and construction (6.5 per cent). Current account remained in surplus. BNM is forecasting a growth of up to 4.8npercent for 2017 versus 4.2 percent in 2016. Ringgit is at a near 6-month high versus the US$ and for Q2 2017is currently the top performing currency in Asia excluding the Japanese Yen.

Inflation averaged 4.3 percent but is expected to decrease from the second quarter onwards. Inflation was 5.1 percent in March 2017. In fact inflation is still above the fixed deposit rate. According to the Department of Statistics, the higher inflation was driven mostly by costlier fuel and food. While fuel is something I could not run away from but for food, I think I have choices. NikkeiAsianReview has an article about it here. According to the article, CIMB Investment Bank’s economic Michelle Chia said, “Core inflation remains well-behaved, and does not require monetary intervention.” She added, “We expect BNM to hold the Overnight Policy Rate at 3.00% in 2017.” Nomura economists Euben Paracuelles and Brian Tan forecast Malaysia’s full-year headline inflation at 4 percent this year. This is higher than the 2.1 percent in 2016. The interest rate has remained unchanged as BNM continues to maintain an accommodative stance towards growth. BNM also said that  “At the current level of the OPR, the stance of monetary policy is accommodative and supportive of economic activity.” Happy following.

written on 19 May 2017

Next suggested article: Malaysian economy? Always watch services and manufacturing

 

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