KUALA LUMPUR: The recovery of global oil prices is
expected to benefit Malaysian economy as it will lead to domino effect across
other sectors and commodities. The recovery of oil prices will also be the
catalyst for Malaysian export and supporting the ringgit value.
OCBC Economist Wellian Wiranto said the oil price would hover around USD$65
per barrel by the end of 2017, subsequently contributing positively to national
coffers. The recovery of oil prices will be a net plus for Malaysia. The plus
point might be lesser than before due to the fiscal side, during the downturn
of the oil price, the government did a wise thing to decoupled Malaysia’s
fiscal budget from oil price.
If the contribution is reducing, the oil subsidy will
also be reduce. So, the dependence on oil of the fiscal budget will be
decreased.” he said after presenting 2017 economic forecast for Malaysia here
today.
Meanwhile, Malaysian export is also expected to recover
propelled by the recovery in the demand from import countries like China. Commodity
export form a bulk of the recovery, it is believe that the oil price would
recover to USD65 per barrel by end of this year supported by the supply cut by
the OPEC and Non OPEC countries. This will help other commodities as well.
Commenting on U.S President Donald Trump’s policies, the
OCNC Economist said no concrete measures
taken by his administration apart from pulling out from TPPA and NAFTA.Malaysian
export to the US is around 7 percent and definitely Malaysia will get hit (on
new trade policies).Compare that to some other countries in the region, not as
badly hit. Vietnam has export to the US 14 percent of GDP.
Being an export dependent country, Malaysia’s economy
will get hit but comparatively not as bad.In the forecast report, OCBC predicts
2017 economy would be around 4.2 per cent boost by domestic consumption.Bank
Negara Malaysia will not revise the Overnight Policy Rate (OPR) this year as it
will lead negative impact on the economy and higher household debts.