Image (Fair use, Wiikipedia) - Malaysian currency
The National ICT Association of Malaysia, PIKOM, has downgraded its GDP growth forecast to reach only 4.2 and 4.0 percent in 2016 and 2017 respectively citing the falling Ringgit and global political developments.
However, Malaysia's overall ICT market will benefit from the impact of disruptive technologies, which should drive digital economic growth to reach 20 percent GDP (gross domestic product) by 2020, said PIKOM chairman Chin Chee Seong (pic below) said during a media briefing in Kuala Lumpur, held to launch the eighth edition of PIKOM's annual industr report, called ICT Strategic Review 2016-2017: Age of Disruptive Technology.
The ICT Services sector (ICTS) outlook especially remains bullish, and should reach RM77.5 (US$17.37) billion by the end of 2016, said Chin.
He said the depreciation of the Ringgit against the US dollar, the unexpected outcome of the UK's Brexit vote and the US presidential election results as well as the uncertain future of the Trans-Pacific Partnership Agreement (TPPA) were the significant factors attributed to the lower forecast.
Chin said the association has adopted a conservative approach with regards to these revised GDP growth forecast, to take into account the potential long term impact of these factors on the economy.
"We are living in economic uncertain times and we cannot ignore the impact of the internal and external factors could have on the future of our economy and our country in particular the potential changes in US economic policies and the threat of a slower Chinese economy," he said, adding that the effects could be far more reaching in 2017.
The China effect
"The lower forecast is based on concerns over uncertainty and upward risks in the external environment," added Chin.
He cited Department of Statistics Malaysia statistics, which had the GDP growth for Q1 2016 as 4.2 percent - a 0.3 percent reduction from Q4 2015. This year's ICT Strategic Review report showed the declining GDP growth rate has continued in Q2 of this year, which marked the slowest expansion since 2009.
However the GDP growth in Q3, demonstrated a better-than-expected performance with Exports growing in August, after 22 consecutive months of contraction, said Chin.
"PIKOM expects the strong performance of Q3 to be carried through to Q4 ending the year with an overall estimated GDP growth of 4.2 percent," he said.
Chin also noted that "it would be interesting to see how bilateral and economic relations with China will strengthen especially after the Prime Minister's recent third official visit to the country since 2009, as this can potentially have a galvanising effect on the Malaysian economy in the long term."
"We certainly look forward to any positive developments as China presents a strong source of Foreign Direct Investment (FDI) and is also a potential huge market for Malaysian products and services," he said.
Domestic, Malaysia remains largely stable with low inflation and unemployment rates, a Y-o-Y declining budget deficit, ample liquidity in financing and a well- supported prudent financial management systems and fiscal policies, said Chin.
Disruptive technologies as game-changers
He said he was confident that the emergence of disruptive technologies - the focus of this year's ICT Strategic Review report, will serve as catalytic game-changers to continue boosting the ICT sector and the economy.
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