Al-`Aqar Healthcare REIT Annual Report 2018

MARKET REPORT SUMMARY 1. ECONOMIC OVERVIEW The global economy is expected to expand 3.7% in 2019, lower than the earlier forecast of 3.9% (IMF, 2018). The downward revision reflects elevating policy uncertainties with several risks stemming to growth from escalating trade tension and outflows of capital from emerging economies. At the same time, global growth has become less synchronized with mixed developments in advanced economies while projection for emerging economies, in particular, developing Asia remains favorable. The outlook for the Malaysian economy remains resilient in the near term despite considerable external and domestic headwinds. Real GDP is projected to expand 4.9% in 2019, respectively, supported mainly by domestic demand. Private sector expenditure, in particular, household spending will remain as the anchor of growth following a continuous increase in employment and wage amid benign inflation. Meanwhile, private investment will be supported by new and ongoing projects in the services and manufacturing sectors. In 2019, monetary policy will remain accommodative and considerations for adjustments will depend on risks surrounding the outlook for domestic growth and inflation. At the same time, the domestic financial system remains stable and intact supported by deep and liquid financial market, sound financial institutions and sustained confidence in the system. Meanwhile, the domestic equity market is projected to continue recording gains despite external headwinds. Islamic banking is expected to remain favourable given strong demand from both households and businesses for Shariah-compliant financial products and services. Towards this end, Malaysia is expected to maintain its position as a global leader in Islamic finance. From the supply side, the services sector is expected to remain as the largest contributor, namely wholesale and retail trade, finance and insurance as well as information and communication subsectors, benefitting from steady consumer spending. The manufacturing sector is projected to register a firm growth primarily driven by continuous demand for Electrical & Electronic. Agriculture and mining sectors are expected to rebound in 2019 after recording a marginal contraction in 2018 following an increase in the production of crude palm oil and liquefied natural gas. Meanwhile, the construction sector is expected to moderate following the near completion of infrastructure projects as well as property overhang, particularly in the non-residential segment. Malaysia’s external position is projected to remain resilient in line with steady global economic and trade performances. However, exports are expected to moderate mainly due to slower global trade and investment activities. At the same time, the current account surplus is expected to narrow following widening deficits in the services and income accounts. (Extracted from Economic Outlook 2019, Ministry of Finance Malaysia) Al-`Aqar Healthcare REIT • Annual Report 2018 44