Malaysians expressed more pessimism about their country’s economy than any other among five Asean nations polled, the FT Confidential Research (FTCR) has found.
According to FTCR, the Malaysian respondents of its latest quarterly survey were less optimistic about economic performance in the next six months, in contrast to Indonesia, the Philippines, Thailand and Vietnam in its survey.
“FT Confidential Research’s Economic Sentiment Index for Malaysia fell 6.1 points quarter-on-quarter to 29.6 in the third quarter of 2016, indicating that the majority of the 1,000 Malaysians surveyed expect the economy to worsen in the next two quarters,” the independent research service by UK business paper Financial Times(FT) has said.
FTCR also said Malaysian respondents’ confidence has not been restored since the economic sentiment index started dropping in late 2014 ahead of the introduction of the Goods and Services Tax (GST) and as oil prices fell.
Noting Malaysia’s weaker economic growth of 4.2 per cent and 4 per cent in the first and second quarters respectively, the research unit predicted the country’s expansion to ease further compared to 2015.
“FTCR expects GDP growth of between 3.9 and 4.2 per cent this year, down from 5 per cent last year,” it said.
It added that Bank Negara Malaysia (BNM) may seek to further cut its interest rate of 3 per cent by another 25 basis points this November, adding to the 25 basis points reduction in July to promote economic activity.
Noting that Putrajaya’s revenues have dipped 10 per cent in the first six months of this year, the research unit said the Malaysian government may also struggle to meet its deficit reduction goals aimed at eliminating overspending by 2020.
“The fiscal deficit stood at 3.2 per cent of GDP in 2015 and the government is struggling to meet its goal of lowering it this year. It may have to jettison its balanced budget goal as it looks to stimulate the economy,” it said.
For the Budget 2016 tabled last year, the deficit target was at 3.1 per cent ― a goal that Second Finance Minister Datuk Johari Abdul Ghani said Tuesday that Malaysia was on track to achieve.
Budget 2015 was tabled with a target budget deficit of 3.0 per cent which was later revised to 3.2 per cent on the back of low global prices for oil.
FTCR also noted Malaysian respondents felt the country’s political climate will worsen in the next six months, with its Political Sentiment Index showing a drop of 1.8 points from last quarter to 29.1 in the third quarter this year.
The Malay Mail Online