Economy will grow sustainably in second half of year, says Guan Eng

Finance Minister Lim Guan Eng says the 1.7% growth in July bucks market expectations of a 2.5% year-on-year drop.

KUALA LUMPUR: The Malaysian economy is expected to grow sustainably for the second half of this year.

This follows the better-than-expected export growth in July and a 97.2% growth in approved foreign investment in the first half of this year, said Finance Minister Lim Guan Eng.

In a statement today, he noted that Malaysia’s July exports rose by 1.7% to RM88 billion from RM86.5 billion a year ago.

This was against market expectations of a 2.5% year-on-year drop — amid a tough global environment beset by rising trade tensions and global growth slowdown.

“The Malaysian economy is also expected to grow sustainably in the third quarter of 2019, after the gross domestic product (GDP) grew robustly at 4.9% in the second quarter,” he said.

For the January-July 2019 period, Malaysia recorded RM81.6 billion worth of trade surplus, which was 15.9% larger than the RM70.5 billion recorded during the same period in 2018.

“This healthy trade balance will keep the country’s current account in surplus for the year and shield the Malaysian domestic economy from rising uncertainties caused by global headwinds, following the continued trade war between China and the US,” said Lim.

The minister noted that Malaysia’s exports to China and the US in July had also increased by 3.8% and 7.9% respectively, compared to a year ago due to trade diversion.

Bank Negara Malaysia (BNM), in a recent analysis, showed that Malaysia had gained a greater share of China and US imports for various items.

“Between July 2018 and April this year, Malaysia’s share of photosensitive semiconductor device and diode-transistor imports by the US increased by 10% and 6%respectively.

“During the same period, Malaysia’s share of China’s imports of petrochemical products increased by nearly 25%,” Lim said.

He said Malaysia had also benefitted from investment diversion with data from the Malaysia Investment Development Authority showing that approved foreign investment in the first half (H1) of 2019 increasing 97.2% to RM49.5 billion from RM25.1 billion in the corresponding period last year.

Approved manufacturing investment from the US surged to RM11.7 billion in H1 2019 from RM307 million during the same period last year.

“The surge in approved investment from the US in H1 this year demonstrates the confidence US investors have in Malaysia,” he said, adding that the confidence was also reflected by US companies with existing operations in Malaysia.

Citing a survey by the American Malaysian Chamber of Commerce (Amcham) on 37 US companies operating in Malaysia, he said 76% of the respondents stated that they planned to expand their investment in Malaysia in the next five years.

“The government will continue its work of attracting high-quality investment, particularly from China and the US, into the country to provide all Malaysians with higher-income jobs.

“The finance ministry will keep a close watch on the economy to quickly undertake any measure necessary to prioritise sustainable economic growth,” he added.