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Positive prospects for the Malaysian economy – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting give their opinions on the potential positive scenario for Malaysia this year.

Key Quotes

“A turnaround in global indicators coupled with receding risks following the signing of the US-China Phase One agreement, lower odds of a no-deal Brexit, and deescalation of US-Iran military tensions has fueled risk-on flows into emerging markets. With continued support from central bank liquidity and low interest rates, global growth remains supported albeit fragile.”

“More positive are emerging signs that countries in the region particularly ASEAN has benefited from trade diversion flows and reorientation of supply chains since tensions between US and China started.”

“Some early signs of a turnaround have emerged across Malaysia’s leading index, industrial output, trade, manufacturing and business sentiment surveys, wholesale and retail trade, and monetary indicators. These signals are encouraging though we are still cautious amid the fragile growth environment and lingering domestic political and policy uncertainties. As such, we still think there are grounds for Bank Negara Malaysia (BNM) to lower the policy rate by 25bps to 2.75% in 1Q 2020 to safeguard this year’s growth and bolster confidence.”

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