KUALA LUMPUR (Bernama) – The global economy, which is currently going through a bleak phase following tumbling crude oil prices, is anticipated to rebound strongly in the second half of next year, says a British economist.
Institute of Chartered Accountants in England and Wales (ICAEW) Chief Economist Douglas McWilliams said oil prices could dip as low as $50 per barrel.
“I hope it will not dip to that level but hover around $80 per barrel,” he said, adding that the global economy was growing sluggishly with major political risks.
Crude oil prices declined about 40 per cent to below $70 per barrel after the Organisation of the Petroleum Exporting Countries decided to maintain its production ceiling.
“We expect the economic growth, in the middle of next year, to be supported by enhanced consumer income including low food, petrol and energy prices,” he told a press conference here today.
McWillams, who is also Executive Chairman of the Centre for Economics and Business Research Ltd (CEBR), said because of low prices, the Malaysian government has been able to abolish petrol subsidies.
He said although low oil prices were negatively impacting oil service providers, nevertheless, it would increase spending power in the country as Malaysia was a large energy consumer.
ICAEW, in its latest report titled, ‘Economic Insight: South East Asia’ said Malaysia’s introduction of a six per cent Goods and Services Tax (GST) will lower its budget deficit from 3.9 per cent in 2013 to 3.5 per cent this year.
“This has resulted in its (Malaysia’s) sovereign debt receiving ratings of A- from Standard & Poor’s and Fitch.
“But with GDP growth of 6.4 per cent in the last quarter and public debt around 54 per cent, Malaysia’s public debt is far from being the problem that it is in European countries,” the report said, adding that the GST would act as a slight drag on GDP growth in 2015.