KUCHING: Business confidence in Malaysia is set to improve this year as the growth of our economy continues to be supported by the manufacturing sector with the return of expansion in new orders, lower stocks alongside rising employment and strong exports.
In an economics report, the research arm of AmBank Malaysia Bhd (AmBank Research) said Malaysia had a relatively strong start to the year with manufacturing production grew at a credible 4.8 per cent year over year (y-o-y) in Jan from 5.3 per cent y-o-y in Dec 2017.
“This was supported by growths in industries like food, beverage and tobacco products which grew 14.4 per cent y-o-y; petroleum products, chemicals rubbers and plastics at 2.1 per cent y-o-y; and electrical and electronic (E&E) equipment products at 4.0 per cent y-o-y.
“Besides manufacturing sales rose 10.8 per cent y-o-y in January from 9.4 per cent y-o-y in December,” said the research arm in an analytical report.
Meanwhile, our Industrial Production (IP) also rose by 3.0 per cent year over year (y-o-y) due to support from our mining sector.
“The sector rebounded to 1.5 per cent y-o-y for the first time in four months due to higher crude petroleum and natural gas output in line with the firmer commodity prices.”
With the expectations of continued strong performance for the Malaysian economy and improvement in demand condition, AmBank Research foresee company expansion plans in the pipeline and a healthy Malaysian ringgit against the US dollar.
Ultimately, these key factors will help support overall business confidence which is seen to be improving.
Moreover, it is also anticipated that distributive trade will remain healthy as it rose 8.1 per cent y-o-y in January, supported by steady growth from the wholesale and retail business which were up 7.9 and 9.9 per cent y-o-y in January respectively.
“We expect distributive trade sales to continue on this positive trend in 2018 due to a combination of factors: better consumer confidence; moderating inflation which should lift disposable income; and a stronger currency that would help ease import costs, translating into higher consumption overall,” said the research arm.
Everything considered, AmBank Research is projecting both whole sale and retail trade to grow around 8 to 9 and 10 to 11 per cent respectively for 2018.
Meanwhile, 2018’s gross domestic product is expected to grow around 5.5 per cent with the ringgit improving to RM3.88 to 3.90 per US dollar with possibility of a best case scenario of RM3.78 to 3.80 per US dollar.