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MIER: Decline seen in Malaysian business sentiment
KUALA LUMPUR: The domestic business sentiment is expected to continue declining from October to December amid slower national economic growth and external vulnerabilities.
However, the Malaysian Institute of Economic Research (MIER) executive director Prof Zakariah Abdul Rashid said the domestic business conditions remained favourable despite the uncertainties on the near-term outlook in the fourth quarter.
Zakariah said local production may experience a sharp decline in the last three months of the year, while sales are expected to deteriorate.
The decline in business sentiment may also mean that employment prospects are likely to remain unexciting.
“The MIER’s Business Conditions Index (BCI) in the third quarter of 2018 slipped 7.5 points quarter-on-quarter to 108.8 points, signalling slower growth ahead. As for the fourth quarter, we expect the BCI to fall further, but it will likely remain above the 100-point threshold of optimism,” he told reporters at the National Economic Outlook Conference 2019-2020 here yesterday.
On the consumer sentiment index, Zakariah expected it to be flattish in the fourth quarter. For context, the index dropped 25.4 points to 107.5 in the third quarter, remaining above the 100-point threshold of optimism.
“Worries over higher prices are waning. Shopping plans will go on but will be done selectively.
“Most respondents expect jobs and incomes to remain stable or increase in the coming months,” he said.
The MIER projected the Malaysian economy to expand by 4.7% for full-year 2018, supported by domestic private consumption.
The think tank revised the forecast downward from 5.5% a month ago, due to a moderation in global demand and weakened investment activities.
However, Zakariah said the domestic economy could achieve a growth of up to 4.9% if the fundamentals perform better than expected in the last quarter.
Asked about the country’s macroeconomic prospects moving into 2019, Zakariah cautioned that the downside risks are rising, particularly due to the weak crude oil prices and the Sino-US trade war.
He also pointed out that the government may be forced to revise its budget for 2019 if Brent crude oil prices remain weak for a prolonged period.
Prime Minister Tun Dr Mahathir Mohamad had said that the Budget 2019 allocation was estimated based on the average crude oil price of US$70 per barrel.
Source: https://www.thestar.com.my/business/business-news/2018/11/28/mier-decline-seen-in-business-sentiment/#GVMWVsGP4k8k0zXc.99