Malaysia: Macro stability reaffirmed – ANZ

ANZ analysts suggest that macroeconomic stability continues to improve for the Malaysian economy.

Key Quotes

“Compliance with the 2019 fiscal targets has been the centrepiece of this macro stability. Looking ahead, there is some scope for a modest relaxation of the original 2020 deficit target of 3% of GDP. Further monetary easing is also likely. An Overnight Policy Rate (OPR) of 3% is not a line in the sand.”

“The objective of this more relaxed policy framework is to address the on-going external and internal headwinds to growth. It is well recognised that Malaysia’s household consumption cannot be sustained at its current rate. There is also considerable uncertainty around investment despite signs that Malaysia may be benefiting from trade diversion.”

“Aside from tentative signs of improvement in the current account surplus and incoming foreign direct investment (FDI), portfolio outflows also seem to be turning.”