“With the uncertainty in the pace of global economic recovery going forward, we think the exports growth momentum will continue to slow.
“This is consistent with our manufacturing output growth forecast of 5.7 per cent in the second half of this year, down from the 16.4 per cent recorded in the first,” OSK-DMG said in a economic research note today.
On average, the level of exports in the first half of the year at around RM151 billion, was less than the 2008 average of about RM156 billion.
“This implies that Bank Negara still believes Malaysia’s exports remain an important engine of growth, even though private consumption growth has shown a robust recovery,” OSK-DMG explained.
On the ringgit front, OSK-DMG said it is likely to see the current strengthening trend of the ringgit tapering off, going into the next two quarters following the end of policy normalisation.
“Our estimated ringgit nominal effective exchange rate (NEER) suggests a close co-movement with the overnight policy rate (OPR) and monetary policy stance.
“We estimate that with our revised OPR forecast of 2.75 per cent for year-end, the NEER gain may slow down, going forward. It has a 75 per cent correlation with the US dollar,” it said.
However, in light of the recent forex liberalisation move by the central bank, OSK-DMG said it has revised its third and fourth quarter forecast for the ringgit lower to 3.15 to 3.16 from 3.20 and 3.18 previously. — Bernama