Maybank IB Research is maintaining its 2017 growth forecast at 4.4 per cent. File pix by MUHAMMAD HATIM AB MANAN.

KUALA LUMPUR: Maybank IB Research is maintaining its 2017 growth forecast at 4.4 per cent (against 2016's 4.2 per cent) on the back of fluid global economic, market, and commodity price situations.

The firm made the assessment looking at the nation's leading economic indicators in January 2017, which comprises real money supply, KLSE Industrial Index, real imports of semi-conductors, real imports of other metals, housing permits & approvals, expected manufacturing sales value, and new companies registered.

"Index of leading economic indicators in Jan 2017 rose 0.2 per cent year-on-year (Dec 2016: -0.4 per cent y-o-y) and 0.7 per cent month-on-month (Dec 2016: 0.8 per cent m-o-m).

"Sequential growth was driven by growth in “Expected Manufacturing Sales Value” (Jan 2017: 0.9 per cent m-o-m; Dec 2016: -0.4 per cent m-o-m); “Number of New Companies Registered” (Jan 2017: 0.4 per cent m-o-m; Dec 2016: -0.4 per cent m-o-m), “KLSE Industrial Index” (Jan 2017: 0.4 per cent m-o-m; Dec 2016: 0.2 per cent m-o-m) and “Real Imports of Semi-Conductors” (Jan 2017: 0.2 per cent m-o-m; Dec 2016: 0.2 per cent m-o-m) which offset the declines in “Housing Permits Approved” (Jan 2017: -0.1 per cent m-o-m; Dec 2016: 0.7 per cent m-o-m); “Real Money Supply” (Jan 2017: -0.3 per cent y-o-y; Dec 2016: 0.1 per cent m-o-m) and “Real Imports of Other Metals” (Jan 2017: -0.8 per cent m-o-m; Dec 2016: 0.4 per cent m-o-m)," Maybank IB Research said.

The research house argued that that the index of leading economic indicators leads GDP growth by one quarter, and the trend - rather than the value - of its percentage y-o-y change is more important in gauging quarterly GDP growth.

"The above is consistent with the economic outlook for 2017 in the recently released BNM Annual Report 2016 which expects real GDP growth to be better this year after two years of slowdown (2017E: 4.3 per cent to 4.8 per cent; 2016: 4.2 per cent) on rebound in net external demand (2017E: 5.3 per cent; 2016: -1.8 per cent) on faster global economic growth, recovery in trade activities and firmer commodity prices, amid steady growth in domestic demand (2017E: 4.4 per cent; 2016: 4.4 per cent) which is largely underpinned by sustained consumer spending growth (2017E: 6 per cent; 2016: 6.1 per cent).

"We maintain our 2017 growth forecast at 4.4 per cent (2016: 4.2 per cent) in view of the still fluid global economic, market, commodity price, political and policy situations, although we acknowledge the potential upsides on the external trade side," the firm said in its report.