KUALA LUMPUR, May 11 (Xinhua) -- Malaysia's growth momentum this year is likely to sustain, although some volatility is seen near term after the 14th general election (GE14), said Malaysian analysts Friday.
Affin Hwang Capital Research believed that the new government led by Pakatan Harapan (PH) will likely maintain Malaysia's real gross domestic product (GDP) growth forecast range of between 5.5 percent to 6 percent in 2018, it said in a report.
The research house also maintained its growth forecast of 5.3 percent this year.
"Going into 2018, we expect Malaysia's economy to still rely more on internally generated growth, especially from private consumption, which benefits from a favorable labor market, steady income growth and positive credit environment," it said.
Despite a negative impact on the market is likely over the near term, it expects market and Malaysian ringgit weakness to be temporary.
Longer term, it remains positive as a stronger middle-income segment and having the right policies in place suggest that Malaysian economy will be on a better footing.
Malaysian economy grew at a faster rate of 5.9 percent in 2017.
Maybank IB Research also maintained the 5.3 percent GDP growth forecast for 2018, pending details on the new government's economic policies, and ahead of the release of first quarter real GDP next week.
Both research houses also held positive notes on the newly formed government as its new cabinet is likely to comprise a group of senior ministers with strong credibility.
Mahathir Mohamad was sworn in as the country's new prime minister on Thursday. He has named 10 core ministries, and indicated he would convene a PH presidential council meeting Saturday discuss the new Cabinet line-up.
"This is positive as it shows that the new government acknowledges the urgency to get down to business immediately," said Maybank.
"While we acknowledge the possibility of short-term capital outflows because of policy uncertainties, we firmly believe the newly formed government presents an opportunity as it is comprised of a group of senior ministers with strong credibility," said Affin Hwang.
With the PH government likely to initiate immediate strategies to generate economic activities, as well as measures on fiscal reform, it expects the ringgit to trade between 3.90 to 3.95 against the U.S. dollar throughout most of the first half, before appreciating to 3.80 by end of the year.
The research house also foresees Malaysia to remain attractive as a destination for foreign direct investment (FDI) inflow under the new government.
