KUALA LUMPUR: OCBC Bank has revised its growth outlook for the Malaysian economy from 4.2 per cent to 4.8 per cent for this year, saying its outlook looks conservative after the strong 5.6 per cent growth print in the first quarter.

This was due to a baseline expectation that global trade will still proceed apace in the second half looks to be a rational one at this point.

Initially, it expected 2017 to be a tough year for export dependent Malaysia due to the protectionist politics in the developed world would impede global trade flows.

“Fortunately, as it turns out, such dejected despair has not been warranted,”the research house said, in a report on its second half outlook for 2017.

“While there remains some risks that whatever fears of protectionism that we had earlier this year may yet pop up as an unpleasant surprise, a baseline expectation that global trade will still proceed apace in the second half looks to be a rational one at this point.”

Despite the new US government’s protectionism messages, global trade flows actually picked up rather encouragingly.

Against this backdrop, instead of being dragged down by a massive global trade slowdown, Malaysia’s economy was in fact boosted by the pleasant surprise of robust trade flows.

Exports grew strongly in the first quarter of the year, by an average of 21.4 per cent year-on-year per month.

“The strong momentum appears to have some tailwinds to it still, with April’s print coming in at a still-commendable 20.6 per cent year-on-year.”

The strong exports appear to have been driven by good demand for Malaysia’s manufactured goods, including semiconductor devices while the recovery in both the prices and demand volume for commodities such as crude oil, LNG and rubber has also contributed to the encouraging upturn.

“Apart from help from external factors aside, the economy has also received a fillip from domestic consumption.”

It was referring to private investment which grew by 12.9 per cent year-on-year in the first quarter compared to 4.9 per cent year-on-year in the previous quarter.

Private consumption continued to power on with a 6.6 per cent year-on-year in the first quarter this year, compared to 6.1 per cent year-on-year in the fourth quarter.

The central bank also recently said growth will be mainly driven by domestic demand amid continued wage and employment growth, and the implementation of new and on-going investment projects.