Malaysia’s central bank provided policy stability by keeping its benchmark interest rate unchanged yesterday after a surprise election victory by opposition leader and former Malaysian prime minister Mahathir Mohamad.
Bank Negara Malaysia left the overnight policy rate at 3.25 percent, it said in a statement in Kuala Lumpur, as predicted by all 18 economists in a Bloomberg survey.
Policymakers sought to address investor concerns after the election result, saying Malaysia’s economic outlook remains positive and “fundamentals are strongly anchored.”
“The domestic economic outlook remains positive, the financial sector is strong and monetary and financial conditions are supportive of economic growth in the post-election environment,” the bank said.
The economy is enjoying a strong rebound at the moment, with growth surging to 5.9 percent last year and forecast by the central bank to reach 5.5 percent to 6 percent this year.
Most of that recovery has come on the back of a pickup in global trade and rising domestic demand, but with trade tensions dominating this year, and exports accounting for two-thirds of GDP, there are risks to Malaysia’s outlook ahead.
Bank Negara was one of the first central banks in Asia to raise rates this year with a hike in January, allowing it to hold off of any further tightening just yet. Inflation is subdued, easing to 1.3 percent in March, the slowest pace since July 2016.
While price pressures are expected to remain moderate this year, “the trajectory of headline inflation will be dependent on future global oil prices which remain highly uncertain,” the bank said.
In a post-election environment, investors are seeking policy continuity, with a focus on sustaining strong economic growth, curbing the budget deficit and managing market risks.
Mahathir has pledged to scrap a contentious 6 percent goods-and-services tax (GST) within the first 100 days in power.
The tax, which was introduced in 2015, is widely blamed by citizens for their rising living costs.
The opposition coalition said it would replace the GST with a sales and services tax that was fairer.
The coalition also promised to reintroduce gasoline subsidies, which could be a boon for consumption as the new government eyes a 6 percent growth goal. They also campaigned to increase royalties to oil-producing states and raise minimum wages.
Financial markets were closed yesterday and are today after the government declared public holidays.
Malaysia is one of the least affected of emerging markets globally from financial volatility amid a stronger US dollar and a pickup in US interest rates.
The benchmark stock index climbed to a record last month, helped by foreign inflows, and the ringgit is up more than 2 percent against the US dollar this year.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San
Clambering hand-over-hand, sweat dripping into his eyes, a durian laborer expertly slices a cumbersome fruit from a tree before tossing it down to land with a soft thump in his colleague’s waiting arms about 15m below. Among Thailand’s most famous and lucrative exports, the pungent “king of fruits” is as distinctive in its smell as its spiky green-brown carapace, and has been farmed in the kingdom for hundreds of years. However, a vicious heat wave engulfing Southeast Asia has resulted in smaller yields and spiraling costs, with growers and sellers increasingly panicked as global warming damages the industry. “This year is a crisis,”