Latest news with #LavanyaVenkateswaran
The Sun
16-05-2025
- Business
- The Sun
RHB maintains 2025 GDP forecast at 4.5% amid global uncertainty
KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) has maintained its 2025 gross domestic product (GDP) forecast at 4.5 per cent year-on-year (YoY), despite Malaysia's first quarter 2025 (1Q 2025) GDP growth data coming in slightly lower than expected at 4.4 per cent. The investment bank said in a note today that the downside risks of growth slowing to 3.5-4.0 per cent appear limited, thanks to the recent progress in US-China trade talks. 'However, we urge caution against premature optimism -- risks may still linger after July 8, when the initial 90-day postponement of tariffs expires. 'Thus far, the exemption from tariffs has been limited to China and the UK, with little information regarding other regions,' it added. Despite a cautious view on external developments, several factors are expected to support Malaysia's economy amid heightened external uncertainties, said the investment bank. 'Domestic demand, in particular, is anticipated to cushion the potential blows from these external challenges as the domestic economy has demonstrated resilience, driven by robust consumer spending and steady investment. 'Strategic initiatives within the MADANI Economy framework, including the National Energy Transition Roadmap and the New Industrial Master Plan 2030, are set to stimulate investment flows over the medium term,' it said. Meanwhile, OCBC senior ASEAN economist Lavanya Venkateswaran said she expects GDP growth to slow to 4.3 per cent YoY in 2025 versus 5.1 per cent in 2024, with the current account surplus likely to be 1.7 per cent of GDP in 2025 versus 1.4 per cent in 2024. 'Under such circumstances, counter-cyclical policy measures will likely be adopted, includlng potential shifts in the government's RON95 rationalisation agenda, targeted support for small and medium enterprises (already started) and targeted additional tax relief. 'For its part, Bank Negara Malaysia (BNM) sounded more dovish at its May 8 meeting, highlighting the heightened uncertainties and downside risks to growth, and it reduced the Statutory Reserve Requirement (SRR) from two per cent to one per cent, effective May 16, releasing RM19 billion of liquidity into the system,' she said in a separate note. Lavanya said further action from BNM boils down to how elevated levels of uncertainty feature in BNM's reaction function. 'We now bring forward our call for BNM to cut its policy rate by a cumulative 50 basis points to the second half of 2025 (2H 2025) from 1H 2026, allowing space for BNM to be pre-emptive. 'We will determine the exact timing of the rate cuts in terms of July 9, Sept 4 and Nov 6 meetings based on incoming economic data and tariff negotiation outcomes with the US,' she added.
The Sun
16-05-2025
- Business
- The Sun
RHB, OCBC maintain cautious Malaysia 2025 GDP outlook
KUALA LUMPUR: RHB Investment Bank Bhd (RHB IB) has maintained its 2025 gross domestic product (GDP) forecast at 4.5 per cent year-on-year (YoY), despite Malaysia's first quarter 2025 (1Q 2025) GDP growth data coming in slightly lower than expected at 4.4 per cent. The investment bank said in a note today that the downside risks of growth slowing to 3.5-4.0 per cent appear limited, thanks to the recent progress in US-China trade talks. 'However, we urge caution against premature optimism -- risks may still linger after July 8, when the initial 90-day postponement of tariffs expires. 'Thus far, the exemption from tariffs has been limited to China and the UK, with little information regarding other regions,' it added. Despite a cautious view on external developments, several factors are expected to support Malaysia's economy amid heightened external uncertainties, said the investment bank. 'Domestic demand, in particular, is anticipated to cushion the potential blows from these external challenges as the domestic economy has demonstrated resilience, driven by robust consumer spending and steady investment. 'Strategic initiatives within the MADANI Economy framework, including the National Energy Transition Roadmap and the New Industrial Master Plan 2030, are set to stimulate investment flows over the medium term,' it said. Meanwhile, OCBC senior ASEAN economist Lavanya Venkateswaran said she expects GDP growth to slow to 4.3 per cent YoY in 2025 versus 5.1 per cent in 2024, with the current account surplus likely to be 1.7 per cent of GDP in 2025 versus 1.4 per cent in 2024. 'Under such circumstances, counter-cyclical policy measures will likely be adopted, includlng potential shifts in the government's RON95 rationalisation agenda, targeted support for small and medium enterprises (already started) and targeted additional tax relief. 'For its part, Bank Negara Malaysia (BNM) sounded more dovish at its May 8 meeting, highlighting the heightened uncertainties and downside risks to growth, and it reduced the Statutory Reserve Requirement (SRR) from two per cent to one per cent, effective May 16, releasing RM19 billion of liquidity into the system,' she said in a separate note. Lavanya said further action from BNM boils down to how elevated levels of uncertainty feature in BNM's reaction function. 'We now bring forward our call for BNM to cut its policy rate by a cumulative 50 basis points to the second half of 2025 (2H 2025) from 1H 2026, allowing space for BNM to be pre-emptive. 'We will determine the exact timing of the rate cuts in terms of July 9, Sept 4 and Nov 6 meetings based on incoming economic data and tariff negotiation outcomes with the US,' she added.
BusinessToday
16-05-2025
- Business
- BusinessToday
OCBC Revises Malaysia's Monetary Policy Forecast
Malaysia's economy expanded by 4.4% year-on-year in the first quarter of 2025, matching advance estimates, but signs of a broader slowdown have prompted OCBC Bank to revise its monetary policy forecast, bringing forward expectations of Bank Negara Malaysia (BNM) rate cuts to the second half of this year. According to OCBC Malaysia's Senior ASEAN Economist Lavanya Venkateswaran, the unchanged GDP print—down from 4.9% in Q4 2024—masks underlying weakness in domestic demand and exports, both of which are expected to weigh on growth in the coming quarters. 'The final Q1 GDP figure reflects softening domestic consumption and investments, coupled with slower goods exports,' OCBC noted in its latest economic update. 'Given the rising external risks, particularly from US trade tariffs, we now expect BNM to cut its policy rate by a total of 50 basis points in 2H25, earlier than our previous forecast of 1H26″ she said. Domestic Demand and Exports Show Signs of Fatigue OCBC noted that the domestic final demand contributed 5.7 percentage points (pp) to GDP growth in Q1 2025, down from 6.0pp in Q4 2024. Household consumption growth moderated to 5.0%, while investment activity cooled to 9.7% from 11.8% in the previous quarter. Public sector spending remained stable, while government expenditure edged slightly higher to 4.3% from 4.0%. Net exports added just 0.8pp to GDP growth, a sharp drop from 2.0pp in Q4 2024. Goods exports grew by only 1.6% year-on-year, while services exports held up relatively well, rising 16.9% amid continued strength in tourism inflows. However, the Bank said inventory drawdowns continued to drag on growth, subtracting 2.2pp from headline GDP—a fifth consecutive quarter of negative contribution from inventories. Sectoral Trends and External Balances On the supply side, downward revisions were made to growth in the manufacturing, construction, and services sectors, although the construction and services sectors remained relatively resilient. The contraction in the mining and quarrying sector was revised to -2.7% from an earlier estimate of -4.9%. Malaysia's current account surplus widened to RM16.7 billion (3.4% of GDP) in Q1 2025, up from RM12.9 billion in Q4, supported by a stronger goods trade surplus and a smaller secondary income deficit. However, the capital and financial account posted a wider deficit of RM20.2 billion, led by increased portfolio outflows and a slight decline in FDI inflows. Growth Outlook Dampened by Global Uncertainty OCBC projects Malaysia's GDP growth to slow further to 4.3% in 2025, down from 5.1% in 2024. Key downside risks include the imposition of US tariffs on Malaysian exports—particularly in sectors like semiconductors and pharmaceuticals—as well as a broader cooling in household and corporate spending due to growing global uncertainty. The bank expects Malaysia's current account surplus to narrow slightly to 1.7% of GDP in 2025, from 1.4% last year. 'With businesses adopting a wait-and-see approach and households turning cautious, economic momentum could ease further,' OCBC said. 'This makes the case for a more accommodative monetary policy.' BNM Signals Readiness to Act At its latest meeting on 8 May, BNM adopted a more dovish tone, citing increased downside risks to the economy. The central bank also reduced the Statutory Reserve Requirement (SRR) from 2% to 1%, effective 16 May, injecting RM19 billion in liquidity into the system. BNM Governor Tan Sri Abdul Rasheed Ghaffour commented that the central bank 'has the policy space to act if needed,' signaling readiness to support the economy if conditions deteriorate. OCBC believes that the upcoming BNM meetings—scheduled for 9 July, 4 September, and 6 November—will be closely watched for signs of a rate cut, depending on incoming economic data and the outcome of US-Malaysia trade negotiations. Related
Business Recorder
15-05-2025
- Business
- Business Recorder
Asian currencies: South Korean won surges
BENGALURU: Emerging market assets were broadly steady on Thursday, following a rally earlier in the week, while investors keenly awaited peace talks between Russia and Ukraine scheduled to take place in Istanbul. The MSCI's gauge for emerging markets stocks was muted, pausing after a 3% rise earlier in the week that was primarily aided by signs of de-escalating trade tensions between the US and its trade partners such as China and the UK. The currencies index was flat against the greenback as traders looked for signs of new trade deals. The South Korean won firmed 0.8%, outperforming regional peers for the second-straight day after the country said it discussed the currency market with the US last week. The won's moves brought back to memory the Taiwanese dollar's unprecedented advances last week, but the Korean currency's gain was tempered by a report that said Washington was not seeking dollar depreciation as part of trade negotiations. Potential trade deals with Japan, India and other Southeast Asian economies were also in focus. 'As we go into the bilateral trade deals, they will try and strike unique deals with every country, but there could be ingredients which are similar across the different countries such as reducing trans-shipments and strengthening rules of origin,' said Lavanya Venkateswaran, senior economist at OCBC Bank. Kyiv's dollar bonds maturing in 2034 and 2036 slipped about one cent on the dollar after it was clear that Russian President Vladimir Putin would not meet President Volodymyr Zelenskiy in person.
Zawya
15-05-2025
- Business
- Zawya
Stocks, currencies steady with trade deals, Ukraine-Russia talks in spotlight
Emerging market assets were broadly steady on Thursday, following a rally earlier in the week, while investors keenly awaited peace talks between Russia and Ukraine scheduled to take place in Istanbul. The MSCI's gauge for emerging markets stocks was muted, pausing after a 3% rise earlier in the week that was primarily aided by signs of de-escalating trade tensions between the U.S. and its trade partners such as China and the UK. The currencies index was flat against the greenback as traders looked for signs of new trade deals. The South Korean won firmed 0.8%, outperforming regional peers for the second-straight day after the country said it discussed the currency market with the U.S. last week. The won's moves brought back to memory the Taiwanese dollar's unprecedented advances last week, but the Korean currency's gain was tempered by a report that said Washington was not seeking dollar depreciation as part of trade negotiations. Potential trade deals with Japan, India and other Southeast Asian economies were also in focus. "As we go into the bilateral trade deals, they will try and strike unique deals with every country, but there could be ingredients which are similar across the different countries such as reducing trans-shipments and strengthening rules of origin," said Lavanya Venkateswaran, senior economist at OCBC Bank. Geopolitics took centre stage in Turkey, where delegations from Ukraine and Russia were expected to meet for peace talks to end a three-year-old war, following pressure from Washington to end the conflict. Kyiv's dollar bonds maturing in 2034 and 2036 slipped about one cent on the dollar after it was clear that Russian President Vladimir Putin would not meet President Volodymyr Zelenskiy in person. The rouble was flat, but has gained about 32% so far this year, despite weak prices of crude oil - a top export commodity - as investors priced in the likelihood of an imminent end to the conflict. Venkateswaran said that the initial impact of a deal is going to largely be felt through commodity prices, and ultimately it will depend on the commitment from each side to understand and resolve this dispute. International bonds of top crude exporters among developing economies slipped, as oil prices fell by about $2 on expectations of a potential U.S.-Iran nuclear deal that could result in sanctions easing. Papers of Angola , Nigeria dropped about one cent on the dollar each. U.S. President Donald Trump surprised markets on Wednesday and met with Syrian officials, with Washington announcing that they would lift sanctions on the country. Trump is next expected to visit the United Arab Emirates next. In central and eastern Europe, Romania's leu and international bonds were steady after data showed weaker-than-expected economic growth in previous quarter. Investors await a highly anticipated presidential election run-off on Sunday. Elsewhere, Sri Lankan dollar bonds maturing in 2035 , 2036 and 2038 dropped more than one cent each. The island nation said it has restructured nearly $931 million in lines of credit and buyers' credit facility agreements with the Indian government. (Reporting by Johann M Cherian in Bengaluru; Editing by Janane Venkatraman)
