The OCBC Bank expects 2019 to remain a challenging year for Malaysia and estimated a moderate growth of 4.4 percent amid slowing global growth and ongoing government fiscal consolidation.

Chief economist Selena Ling (photo) said Malaysia and other open Asean economies, such as Thailand and Singapore, would be more vulnerable on the trade front.

“The extent of the slowdown would depend on the US-China trade tensions, China’s economic slowdown and the commodity market’s performance,” she said at the '2019 Outlook: A Brave New World' seminar organised by the bank in Kuala Lumpur today.

Ling said the growth would also be influenced by the supply issue in commodity driven sectors such as agriculture and mining, though the manufacturing sector had benefitted from some front loading of exports due to the US-China trade war in the third quarter of 2018.

"Going forward, supply issues may still affect the mining sector, while the manufacturing sector's outlook may depend on the outcome of the trade talks," she said.

Later at a press conference, Ling said reliance on oil would be a challenge for Malaysia given its higher share of the country's total revenue and advised the government to look at other new income sources.

She said global oil price is expected to be subdued and if it remained at the current level of around US$50 (RM207) per barrel until year-end, there might be a shortfall in revenue for Malaysia.

"As far as the budget revision is concerned, I suspect (it will) not be so soon because the US$70 is a medium-term price target and oil prices have been volatile in the last six months.

"But if you look at the average price, it is relatively stable and maybe for the next budget in October 2019 they (the government) may revise the oil price assumption," she responded to a question, on whether the government should revise Budget 2019 given the present lower oil prices.

OCBC Bank expects the average price of West Texas Intermediate to be at US$58 per barrel this year, while the Brent crude will be at US$63 per barrel.

- Bernama