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FXTM: GST Removal Seen A Positive Support For Malaysian Economy

via THE EDGE MARKETS: KUALA LUMPUR (July 10): The removal of goods and services tax (GST) is seen as a potential positive on the Malaysian economy as it would free up more disposal income, though it may take six months or more before the actual impact could be thorougly assessed, according to FXTM’s global head of currency strategy & market research Jameel Ahmad.

“The GST removal could have a positive impact on GDP (gross domestic product) growth, based on the aspect that consumers will have more disposal income and they could spend that disposal money elsewhere.

“But with any new government or any new initiative, it takes time [to know for sure] — it could take six months or longer. Right now, it’s too early to tell,” Jameel told a media conference held here today.

Regardless, he is of the view that the GST might have come at an opportune time to help lift consumer sentiment and consumer spending, amid headwinds faced externally, what with a potential trade war on the horizon that is seen slowing growth in many economies.

Citing the slower growth performance in the United Kingdom, European Union and even China, Jameel said it is possible that global growth have peaked last year, and as such, slower growth should be expected going forward.

Similary, Jameel expects Malaysia’s GDP to expand by at least 5%, a slower growth compared with the strong 5.9% growth recorded in 2017.

“2017 is a significant outperformance. GDP growth for 1Q this year expanded by about 5.4%. It looks like a slower growth, if you compare it with last year,” he said.

For Jameel, consumer spending and consumer sentiment — as measured by the consumer sentiment index — will be key indicators to watch out for in the second half of the year, amid ongoing external uncertainties.

“There are so many external risks and a lot of uncertainties in the market place. It’s very important for consumer sentiment and consumer spending to remain strong in the second half,” he added.

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