Standard Chartered lowers growth forecast for Malaysia

Kuala Lumpur (VNA) - Malaysia could be one of the three countries in Asia which are the most negatively affected by the trade war between the US and China if the dispute continue to worsen, according to Standard Chartered.

Edward Lee, the bank’s chief economist for the Association of Southeast Asian Nations (ASEAN) and South Asia, warned that the trade dispute between the US and China could further weaken Malaysia’s economic performance, which has already been moderating in recent times.

According to the economist, Malaysia’s gross domestic product (GDP) grew weaker than expected at 4.9 percent in the first half of 2018 due to supply-side disruptions, apart from the technical “high base” effect.

If the US goes ahead with the 25 percent tariff on the next 200 billion USD worth of Chinese imports plus the previous 25 percent on 50 billion USD worth of imports from China, the potential impact on China’s growth could be 0.6 percentage points and that is massive.

This could result in a 0.3 percentage point impact on Malaysia’s GDP growth, The Star quoted Lee as saying at a media briefing on September 4.

As for the economic performance in the second half of 2018, Lee did not discount a potentially slower growth for Malaysia, given the rising external headwinds, moderation in growth drivers such as investment and government spending as well as negative trade sentiment.

Considering the key risks facing the domestic economy, Standard Chartered has slashed its economic growth forecast for Malaysia in 2018 to 4.8 percent, down from its earlier forecast of 5.3 percent.

On the ringgit, Standard Chartered foreign exchange strategist for ASEAN and South Asia Divya Devesh expects the local currency to trade at RM4 per US dollar by the end of 2018 and at RM4.10 per US dollar by the end of 2019.-VNA