Nomura picks 2018 GDP winners 

Prolonged growth in Indonesia and the Philippines will extend beyond 2018 driven by domestic demand and infrastructural projects, Nomura Securities investment bank has predicted. 

The Japanese financial holding company raised the Philippines’ GDP growth forecast from 6.7 per cent last year to 6.9 per cent for 2018 on the back of rising domestic demand and increased global trade. A proposed tax reform is expected to boost government revenue, funding infrastructural and social spending, Nomura reported.

The report raised the Philippine consumer price index forecast for this year from 3.9 per cent to 4.3 per cent, driven by the impact of the tax reform and the projected Brent crude oil price of US$65 per barrel.

The central Bangko Sentral ng Pilipinas is expected to increase its policy rate by around 100 basis points to 4 per cent over the next 12 months.

Higher investment spending and business reforms were due to boost growth in Indonesia, Nomura said.

Its GDP is expected to increase by 5.6 per cent in contrast with last year’s 5.2 per cent.

Malaysia, where the year will be dominated by the looming general election, as a net exporter of oil and gas would be a “clear-cut winner” across Asean, the investment bank predicted.

The world’s second largest palm oil producer after Indonesia may see its exports of the product increase after the government suspended export taxes on crude palm oil.

Malaysian Plantation Industries and Commodities Minister Mah Siew Keong announced recently the suspension of export taxes until April 7, in a bid to stimulate palm oil exports and reduce stocks.

The strengthening of the ringgit against the US dollar, rising by almost 10 per cent last year to 4 ringgit, exceeded last year’s forecast, according to Brian Tan, Nomura’s Asean specialist.

The Malaysian economy was forecast to rise by 5.5 per cent this year, on the back of export growth and spending in the private sector.

Tan said the central Bank Negara Malaysia was due to normalise its accommodative monetary policy stance during January, increasing interest rates by 25 basis points to 3.25 per cent before the window closed ahead of the general election, which must take place before August and is expected to be called as early as April. Nomura said a rate hike after the election is unlikely as the authorities will tighten spending to meet its budget deficit target of 2.8 per cent of GDP. Nomura predicted victory for the ruling coalition of embattled prime minister, Najib Razak.


Palm oil fruit harvest. Picture credit: Flickr