Malaysian economy beats expectations with 4.9% 2Q GDP growth – ING

Despite upbeat Malaysian Q2 GDP growth numbers, the ING analysts still expect the central bank of Malaysia to cut the interest rates this year.

Key Quotes:

“Firmer growth, low inflation, and a healthy external payments position – all are coming together in support of positive investor confidence in the economy in the current global economic turmoil.

That said, we see GDP growth in the rest of the year remaining close to the top end of BNM’s 4.3-4.8% forecast for 2019.

We maintain our full-year growth forecast at 4.7%. We have cut our inflation forecast for the year to 0.8% from 1.0%, and are now looking to revise our 2% of GDP current account surplus forecast higher.

We don’t think the authorities will relax just yet. Persistently low inflation allows scope for more Bank Negara Malaysia (BNM) policy easing.

We have stuck in an additional 50bp of BNM rate cut in our forecast for policy rates for the rest of the year, taking them to 2.5% by year-end. Even so, the MYR should remain a resilient Asian currency within emerging markets.”