KUALA LUMPUR: Malaysia's economic growth is expected to bounce back in the second half of the year after most likely hitting its lowest level in nearly three years during thr first quarter, economists said.
They said the economy may have posted the slowest quarterly expansion since the second quarter of 2016 but with the recovery in oil price, a significant pick up is expected from July till December this year.
The oil price had gained around 30 per cent in the first quarter of this year, with Brent posting its best quarterly performance in a decade since the second quarter of 2009.
Economists too have upgraded their forecast to a median of US$68.25 a barrel from US$67 in just about less than a month, according to Bloomberg's survey.
Bloomberg Intelligence economist Tamara Mast Henderson said Malaysia's economic outlook in the second half of the year may be more positive as oil prices have recovered and supportive measures taken by China, Malaysia's top trading partner, are bearing fruit.
"The bright side for Malaysia's economy in the second half of this year is that oil prices have regained ground."
And China's stimulus measures appear to be getting traction which will cushion Malaysia's exports. Tax cuts should continue to support domestic demand," she said in a note.
"We expect the central bank to maintain the same degree of accommodation in 2019," she added.
ING Group, the latest to update its economic forecast for Malaysia this month, has also predicted a significant pick up in the country's economic growth to 4.8 per cent for the second half of the year. It predicted 4.2 per cent economic growth for the first quarter of this year.
Bloomberg's survey of economists shows that the Malaysia's economic growth forecast median in the first quarter stood at 4.3 per cent, just a little higher than historic low of four per cent registered in the second quarter of 2016.
Tamara said Malaysia's economy ended 2018 on a stronger note, recording the first pickup in growth since the third quarter of 2017.
But the fourth quarter momentum may not persist into the first half of this year as uncertainty about United States' trade policy dragged into the second quarter of this year and global growth faltered, she added.
Bank Negara Malaysia is expected to announce Malaysia's gross domestic product growth for the first quarter on May 6.