The Malaysian ringgit gained today after Malaysia’s economy surprised experts, growing more than expected despite negative fundamentals. Economists remained largely pessimistic, though, arguing that the economy will likely not be able to maintain the impressive performance.
Malaysia’s gross domestic product rose 4.9% in the second quarter of 2019, year-on-year, accelerating from 4.5% in the first quarter. The actual increase was a bit bigger than the consensus forecast of a 4.8% growth. Furthermore, the expansion exceeded the upper bound of the government’s forecast range of 4.3%-4.8% economic growth. Private consumption was the biggest contributor to growth.
Nevertheless, the Central Bank of Malaysia maintained its forecast for economic growth at the 4.3%-4.8% range. And on top of that, the central bank stated in its quarterly bulletin:
The outlook is subject to downside risks from lingering uncertainties in the global and domestic environment, worsening trade tensions and extended weakness in commodity-related sectors.
Indeed, economists were skeptical about Malaysia’s ability to keep its strong economic growth during the US-China trade conflict considering the strong trade ties Malaysia has with China.
USD/MYR fell 0.39% to $4.1782 as of 12:19 GMT today.
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