The persistently sluggish corporate sentiment signalled their view on the current economic environment, which has been plagued by uncertainties since 4Q 2018.— Reuters pic
KUALA LUMPUR, Sept 25 — The overall business optimism is still sluggish, a persistent trend since the beginning of this year as indicated by the latest RAM Business Confidence Index (RAM BCI) for the Fourth Quarter 2019-First Quarter 2020.
In a statement, RAM Rating Services Bhd said firms have maintained a cautiously optimistic outlook through the next six months. The corporate index slipped 0.2 points to 53.2 while the small and medium enterprise (SME) Index inched up 1.4 points to 53.2,” it said.
The rating agency said although the latest readings for Corporates and SMEs converged at 53.2, they highlight that these two cohorts face different circumstances and prospects.
“The main drivers of better SME sentiment this quarter are greater optimism on access to bank financing and improved performance indicators. SMEs’ performance is highly influenced by new orders and projects. As such, their business prospects tend to be quite volatile,” it said.
The persistently sluggish corporate sentiment signalled their view on the current economic environment, which has been plagued by uncertainties since 4Q 2018.
At the same time, US-China trade tensions have worsened, along with firmer signs of weaker global demand this year.
“In particular, the sentiment of export-oriented firms declined 3.6 points to 54.0 in the latest survey,” RAM Rating said.
Going into 2020, the comparatively stable domestic-oriented sectors — which experienced a slight improvement in sentiment this quarter — will remain the underlying economic driver.
“The resumption of big-ticket construction and public-sector infrastructure projects, as well as the resilience of the business services sector, bode well for Malaysia’s growth prospects,” it added. — Bernama