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World Bank senior economist for Malaysia Rafael Munoz Monero said the country’s strong labour market and stable income growth would be able to sustain domestic demand.
“The government has also been pushing for infrastructural projects, which counter-balance the declining private investments,” said Monero during a discussion on “2017 Economic Forecast, Sector Outlook and Credit Trends” here yesterday.
The discussion, part of a one-day conference, themed “Riding the Wave of Asean Bond Market Integration”, was jointly organised by RAM Ratings and PEFINDO Credit Rating Agency.
Monero said the improving commodity prices had also been a boon to Malaysia.
“We are also seeing a slight improvement in the external front, mostly coming from the increasing commodity prices.
“That would probably provide fiscal ease to revenues.
“Some improvements in several sectors related to the commodities, such as palm oil, would benefit from higher prices,” he said.
Also present were RAM Ratings Services Bhd deputy chief executive officer Promod Dass, Standard and Poor’s Ratings Services Asia-Pacific economist Vincent Conti, and PEFINDO Credit Rating Agency rating director Vonny Widjaja.
During the session, Conti said the move taken by US president Donald Trump to withdraw from the TPPA had weakened the effect of the mega trade agreement.
“And now we have to face the risk of tariffs. Trump’s campaign had labelled China as a currency manipulator, which immediately allows them to impose 45% tariffs on China’s imports.
“There is a lot of risk to global trade flows, particularly within South-East Asia, as the region does not export a lot of finished goods.
“The slowing down in global trade will definitely be terrible news for trade within the region,” he said.
Meanwhile, session moderator, CIMB group chief economist Dr Arup Raha said there were a lot of uncertainties due to the US’ policies and the interest rate movements, and they would likely affect the external environment as well.
Speaking to reporters after the end of the discussion, Arup also cited the US’ move to withdraw from the TPPA as one of the factors which affected the market.
“Now we have to see what they will do with regards to China, whether they will actually impose tariffs or not.
“As you know, supply chains run rampant across Asia, and tariffs on China could mean tariffs for everyone in the region,” he said. – Bernama
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