Two OPR Hikes Expected 2H Of The Year With GDP Growth 5.6% For The Whole Year: CGS CIMB

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CGS CIMB has maintained its 2022 GDP at 5.6% and projects two OPR hikes of 25bps each in the 2H22 of the year at 2.50%

It said that the 1Q22 recovery raises hopes for a robust 2Q22 GDP ahead but adds that the risk of a global slowdown has also risen.

On the private consumption side, the research house said that the large EPF withdrawals, the high commodity-related income, as well as continued recovery in the labour market, could point towards increased household spending.

However, it said that the risk of a global slowdown has increased amid rising uncertainty over the extent of China’s slowdown, the adverse impact of aggressive Fed rate hikes on the US economy, and the lingering Russia-Ukraine crisis.

“Thus far, 1Q22 GDP has been driven by domestic demand recovery, while export growth has moderated (+4.0% qoq sa in 1Q22 vs. +6.8% QoQ sa in 4Q21),” the stockbroking firm said.

On Malaysia’s current account (CA) surplus, it said that it fell to RM3.0 billion, or 0.7% of GDP in 1Q22, well below our expectation of a 3.3% surplus.

The research house said that the sharp fall was partly led by a smaller surplus in the goods account at RM40.5billion (4Q21: RM51.7bn), likely stemming from a lower volume of trade despite the high commodity prices.

Onwards, it said that the intake of foreign workers may help to raise export production while border reopening may bring the much-needed tourist receipts; however, weakening global demand could offset these gains. “On balance, the current account may not maintain its stellar performance. As such, we lower Malaysia’s current account surplus to 1.7% of GDP, from 3.2% earlier,” CGS CIMB said.

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