Executive director Dr Zakariah Abdul Rashid said although its fourth-quarter Business Condition Index, which tracks domestic manufacturing activities, dropped to below the 100-point threshold to 95.3 points, the Expected Index (EI) increased marginally on expectations of production and export sales.
During the quarter, the EI stood higher at 112.5 points, up by 16 points.
He said the market is closely watching the US-China trade talks due in March, with the hope that Presidents Donald Trump and Xi Jinping would reach a positive deal.
He said this positive impact would also lead to better GDP growth in 2019. MIER is maintaining its GDP growth target of 4.7% for 2018 and 4.5% for this year, he noted.
“After March, if there is any interesting news from Trump, we will need to calculate back our numbers.
“If the world economy grows better, we are ready to reap any positive effect and we will perform better than 4.5%,” he said.
He pointed out, however, that both growth and sentiment might be further dragged down if the two leaders’ talks fail, as both their countries are currently major trading partners of Malaysia.
The US previously said it would increase tariffs on Chinese goods on March 2, 2019, as both countries started negotiations last December.
Zakariah said a not-so-rosy trade performance had continuously pressured the ringgit, which currently stands at the 4.100 level to the US dollar.
Locally, he said domestic demand, mainly private consumption, would continue to anchor GDP growth.