KUALA LUMPUR: RHB Banking Group says it does not "buy the World Bank's idea" that Malaysia's economy will grow below five per cent this year.
RHB has kept its growth projection for the country's gross domestic product (GDP) projection this year unchanged at 5.4 per cent as it expects modest recovery in consumption towards the second half (2H) of the year.
Group chief economist and head of financial market research Dr Sailesh Jha said the bank had downgraded its GDP projection earlier in January from 6.3 per cent, after the implementation of the Movement Control Order (MCO) 2.0.
"We don't buy the World Bank's idea or any other international institutions' that we are recording (GDP) growth of below 5.0 per cent.
"The consumer (spending) is in a decent recovery path in the 2H of the year," Sailesh said at RHB's virtual briefing on the "Quarter Three 2021 Global Market and Economic Outlook" today.
Last week, the World Bank slashed its growth projection for Malaysia for the second time to 4.5 per cent from 6.0 per cent estimated in March and 6.7 per cent in December 2020 after taking into account a flare-up in Covid-19 infections and slower-than-expected vaccine rollout.
The World Bank Group senior economist Shakira Teh Sharifuddin reportedly said the country's economic recovery was being hindered by a resurgence in infections since mid-April, coupled with the MCO reimposition.
On the ringgit, Sailesh said RHB was maintaining its target of 4.20 against the US dollar.
"We have been US dollar bulls since December 2020 and we continue to maintain this view. We expect the proxy for the US dollar, which is the DXY Index, to average around 91-92 in 2H 2021, followed by 92-93 in 2022, with the risks tilted to the upside.
"Our highest conviction ideas are to long financial assets related to the Malaysian consumer, which benefits from a depreciating real exchange rate. Our currency strategy team advocates to go long US dollar/Singapore dollar and short Australia dollar/US dollar."
He added that the main catalysts for RHB's counter-consensus US dollar view were a flattening of the US Treasury curve and bouts of flights to safety as the market digested a more hawkish US' Federal Reserve in 2H 2021.