Malaysia's economy to remain resilient in 2017: MARC

Chief Executive Officer Mohd Razlan Mohamad said this was evident by the rebound in Gross Domestic Product (GDP) growth in the final quarter of 2016 at 4.5 per cent, and mainly underpinned by low private consumption volatility when compared with regional economies.

"Private investment is also rebounding, supported by the implementation of large infrastructure projects such as the Klang Valley Mass Rapid Transit 2, Light Rail Transit 3 and the Refinery and Petrochemical Integrated Development (RAPID)venture," he told a media briefing in conjunction with the 2017 Malaysian Economics & Sectoral Outlook Investors Conference here, today.

Mohd Razlan said a stable investment climate was also evident from a sustained amount of corporate bond issuance of around RM85 billion per annum in the past four years.

However, he said MARC predicted Malaysia's external sector performance, would continue to exert pressure on its headline growth.

This include the lacklustre pace in global demand which caused exports in the US dollar terms to post negative growth and the below trend growth of China's economy, Malaysia's largest trading partner.

"Going forward, a possible trade war between China and the United States may induce the former to continue devaluing its currency, hence hurting Asian exporters such as Malaysia," said Mohd Razlan.

Meanwhile, the rating agency's Chief Economist Nor Zahidi Alias said the continuing rebound in global crude oil prices would be positive for the Malaysian economy this year, thus enhancing the government revenue and improving overall business sentiment.

"On the domestic front, consumer spending remains a pillar for the economy in 2017, though growth is expected to remain below the long term growth trend.

"Notwithstanding this, domestic demand will remain the primary source of growth, while the key downside risks to our forecast will stem from reservations in the exterior environment," he added.

He said from a sovereign rating perspective, many of Malaysia's median macroeconomic parameters remain well in line with its single-A peers, which include Malaysia's real GDP growth, per capita GDP and Purchasing Power Parity (PPP) terms and amount of gross international reserves in the US dollar terms.