Malaysian Economy Enjoys a Great Run while India, Indonesia Stem Outflows

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Malaysia's economy had a great run through the first half of 2018, said Moody’s Analytics in a recent statement.

“We expect GDP growth hit 5.4% year-on-year in the June quarter, unchanged from the March quarter's pace,” the research firm noted. “Buoyant tech demand is providing a key support to manufacturing and exports given the economy's outsize exposure.”

Private consumption likely enjoyed a lift from government cash handouts and the removal of the goods and services tax in early June, which encouraged higher discretionary spending, the firm pointed out, adding that the brakes will be applied to the upbeat growth engine a little in the second half, as the newly elected government has ended some infrastructure projects.

While India has replaced France as the world’s sixth largest economy, the country’s inflation pulse is rising, according to Moody’s Analytics.

“Because of that and emerging market outflows, the Reserve Bank of India is reluctantly tightening interest rates, the firm said. “We expect CPI gathered further momentum in July amid higher energy prices and the weak rupee, amongst Asia’s worst-performing currencies this year.

Also plagued by outflow is Indonesia, the country’s central bank has also been on the tightening bandwagon, said Moody’s Analytics.

“We expect the central bank will take a breather in August, following 100 basis points worth of hikes since mid-May,” the firm said. “The recent earthquake and broad-based relief for emerging markets across the globe in July are contributing factors.”


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