A survey of 1,000 Malaysians has shown they expect the economy to worsen in the next two quarters.
These results make Malaysia the most pessimistic of five Asean countries surveyed. The others surveyed were Indonesia, the Philippines, Thailand and Vietnam, clickfinancialnews.com reported.
The findings were part of the latest quarterly survey by the Financial Times Confidential Research (FTCR). FTCR is the independent research service by UK business paper “Financial Times”.
The website said the FTCR’s Economic Sentiment Index for Malaysia fell 6.1 points quarter-on-quarter to 29.6 in the third quarter of 2016.
The website said the index first fell in late 2014 when oil prices collapsed and Malaysia’s consumers braced for the imposition of the consumption tax, Goods and Services Tax (GST), on April 1, 2015, and confidence had yet to return.
The website noted that Bank Negara Malaysia statistics also indicated that loan growth had been decelerating over the past year.
In July, annual growth in outstanding lending fell to 5.1 per cent from 5.6 per cent in June. This is well below the 9 per cent average loan growth recorded in 2015, it said.
The website believed this slowdown will be sustained into early 2017.
Gross Domestic Product (GDP) growth decelerated to 4 per cent year-on-year in the second quarter, from 4.2 per cent in the first.
FTCR expected GDP growth of between 3.9 and 4.2 per cent this year, down from 5 per cent last year.
“Looking to boost growth, the central bank lowered its policy interest rate by 25 basis points to 3 per cent in July. An additional 25bp cut is possible in November.”
Regarding the 2017 Budget to be tabled on Oct 21, FTCR expected Prime Minister Najib Razak, who is also the finance minister, to increase social welfare spending as Malaysia faces the next general election, which must be held by August 2018.
It noted that government revenues fell 10 per cent in annual terms in the first half.
The fiscal deficit stood at 3.2 per cent of GDP in 2015.
A chaotic political situation is adding to the dismal economic mood. FTCR’s Political Sentiment Index slipped 1.8 points quarter-on-quarter to 29.1.
FTCR data showed about 60 per cent of the 1,000 surveyed did not approve of Najib’s performance in the third quarter of 2016, down from 80 per cent in the fourth quarter of last year.
It however noted that the Opposition was split into three groups — too divided to challenge Najib effectively at the ballot box.
FMT Reporters Online