Page 97 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

could affect investor sentiments, heighten market central banks, including the Fed, to communicate
volatility and disrupt global trade networks, thus that the future pace of monetary tightening will
affecting overall economic performance. Over the likely be gradual and data-dependent. The flattening
longer term, persistent trade uncertainties could trend of the global bond yield curves will likely
hit real investment activities that may lead to an persist, catalysed by higher global risk aversion.
even lower economic growth potential because
of limited productive capacity. While some Asian On the other hand, the prospects of global equities
economies, including Malaysia, may benefit from the are expected to remain subdued, given persistently
reconfiguration of the global trade production chain, stretched valuations in selected key markets and
all economies stand to lose due to overall weaker diminishing earnings growth outlook. Meanwhile,
global trade and investment activities. credit spreads between EMEs and AEs are projected
to remain relatively contained, amid the possible
The global capital markets will also be characterised turnaround in global portfolio flows favouring EMEs’
by the ongoing shift in global financial liquidity, assets as a result of a potentially less aggressive
mainly driven by developed markets’ monetary Fed. However, investors’ appetite towards EMEs’
policy normalisation. However, heightened downside assets are likely to remain selective and in favour of
risks to global growth have induced most major economies with strong fundamentals.

Chart 14
Malaysian economy will be driven by continued expansions in manufacturing and services sector,
and supported by recovery in private investment spending

Contribution to GDP by supply side components Private and public investment growth
120 25

100 20

80 15
% contribution 60 % y-o-y 10

5
40

20 0

0 -5

-20 -10
2015 2016 2017 2018 2019f 2020f 2012 2013 2014 2015 2016 2017 2018 2019f 2020f

Agriculture Total services Construction Public investment Private investment
Manufacturing Mining & quarrying Plus import duties
Source: DOSM, Ministry of Economic Affairs, SC’s calculations

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