Thursday, April 18, 2019

MIER Say Malaysia's GDP to Grow in 2019

The Malaysian economy is in deep shit – but the Malaysian Institute of Economic Research are telling us we should be upbeat. 

Ahem, MIER have projected that the country’s gross domestic product is to grow in 2019. It must be magic! 

In their Malaysian Economic Outlook: First Quarter 2019 Update report released Tuesday, MIER said the services sector is forecast to grow moderately 5.5 percent this year, down from 6.8 percent in 2018, and would remain the largest contributor to GDP growth. 

They predicted the sector is anticipated to continue benefiting from a cheaper ringgit and gaining strong investments this year. “About half of (Malaysia’s) approved investments were for services sector projects, creating more than 68,800 new employments,” they said. 

MIER said the manufacturing sector, the second largest contributor to GDP, is expected to grow 4.6 percent in 2019, down from 5.0 percent last year as interim data pointing to a sluggish manufacturing performance due to slower global demand growth. 

They viewed slower growth in global demand can be attributed to a slower than expected growth in some major economies and this was amplified by the growing protectionist sentiment around the world, especially with the heightened US-China trade war. 

Meanwhile, MIER said the agriculture, mining and quarrying, and construction sectors in 2019 are expected to grow at a faster pace compared with the previous year. 

The agriculture sector is projected to grow 1.3 percent this year, partly due to demand for crude palm oil driven by an increase in demand for biodiesel and the depressed value of ringgit, compared with a contraction of 0.4 percent in 2018. 

The mining and quarrying sectors, MIER said, are expected to grow 1.3 percent for the next two years, up from a 1.5 percent contraction last year. 

The construction sector is expected to grow 5.0 percent this year compared with 4.2 percent in 2018. 

In terms of contribution to the GDP growth, the services sector is expected to contribute the most to growth with 3.1 percentage points followed by the manufacturing (1.1 ppts), construction (0.2 ppt), agriculture (0.1 ppt), and mining and quarrying sectors (0.1 ppts) sectors. 

I guess we have to stay optimistic and hopeful. What choice do we have?

Yesterday, a Malay Mail Online report informed us that the Pakatan Harapan government have allocated RM6.3 billion to rescue FELDA and another RM17.8 billion on a restructuring plan for Lembaga Tabung Haji. 

In effect, they are bailouts for problems created and entrenched during the previous infamous Barisan Nasional administration. 

The RM24.1 billion to resuscitate the smallholder farming agency and Muslim pilgrimage fund after years of alleged financial mismanagement and fraud is huge, to say the least. 

For perspective, it is the equivalent of nearly 8 percent of the whole federal Budget for 2019. 

Anyway, Malay Mail calculated what else Malaysia might have had with an extra RM24.1 billion:

Dream on!

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