Malaysia shrugs off fears of slowing growth

Domestic demand will keep the economy afloat.

Malaysia’s central bank reiterated its 2016 growth forecast of 4.0% to 4.5%, claiming that domestic demand and private sector spending will keep the economy afloat even as oil prices stay low.

According to a report by UOB, Bank Negara Malaysia noted that sustained income growth and manageable unemployment would support domestic-driven growth this year.

UOB added that the ringgit is likely to be supported by news that proceeds from 1MDB’s energy asset sale are likely to be repatriated.

UOB noted that BNM is unlikely to cut interest rates this year.

“We think BNM will keep its powder dry as economic conditions have slowed but not shown a significant deterioration akin to the Global Financial Crisis. The preference is to allow the growth support measures (announced during the recalibrated 2016 budget) to take effect,” UOB said.