Posted on : 20-11-2012 | By : sabah today | In : News
November 20, 2012
KUCHING: Following the announcement of Malaysia’s third quarter (3Q) gross domestic product (GDP) last Friday by Bank Negara Malaysia (BNM) Governor, Tan Sri Dr Zeti Akhtar Aziz, the nation’s full-year GDP growth is now projected to be above five per cent.
Malaysia registered a steady strong GDP growth of 5.2 per cent in 3Q12 despite strong external headwinds. This was attributable to strong domestic demand led by private consumption and investment activities.
According to Alliance Research Sdn Bhd chief economist, Manokaran Mottain, “This was in line with the government’s drive to stimulate income growth, improve and develop infrastructure and ensure a steady flow of foreign capital.”
Going forward, with persistent global uncertainties, he expected 4Q GDP to moderate between 4.5 to five per cent.
As such, the full-year forecast was expected to exceed five per cent this year, led by stronger private consumption and investment activities from Economic Transformation Programme (ETP) projects.
“In line with the government’s continued spending to develop infrastructure and its recently announced bonus to civil servants and cash handouts to targeted groups, we are also confident that growth will be healthy at around five per cent in 2013,” he added.
Patricia Oh, an economist from the research arm of TA Securities Holdings Bhd, also revised her full-year GDP growth projections upwards by 0.5 percentage points to 5.4 per cent this year due to the higher than expected growth during 3Q.
“Also, our 4Q12 project is raised to 5.5 per cent as we anticipate stronger contributions by the domestic related economic segments. GDP may advance by 5.2 per cent in 2013, as growth could potentially be backed by sustainable consumption demand during the year.
“In part, the ETP initiative had been a driver of growth as the private sector drove the gross fixed capital formation (GFCF) by 22.9 per cent year-on-year (y-o-y) while the public sector investments grew by 22.4 per cent,” Oh recapped.
Announcements had also been made by Performance Management Delivery Unit (Pemandu) last Friday, regarding an additional 11 projects which were expected to bolster investments by RM6.68 billion.
TA Securities’ Oh projected that this could lift gross national income value by RM1.129 billion and create 40.021 new jobs by the end of 2020.
“Going in 4Q12 and 2013, Malaysia may continue to rely on the sustainable demand in the local front, driven in part by the low inflation and healthy labour market condition,” Oh forecasted.
She believed that the prevailing low inflation environment would provide room for BNM to maintain its accommodative monetary policy stance in support of growth.
Meanwhile, Manokaran expected the downside risks to prevail as recession continued to plague the eurozone due to lack of a clear resolution regarding the debt crisis.
This reflects the expectations of Kenanga Investment Bank Bhd’s research arm (Kenanga Research) as its report noted that “Our main concern is the growth trajectory for 2013.”
“We maintain that impact of weakness in global economy would spillover into the first half of 2013 as the resolve for the eurozone debt crisis would remain slow and the continent is in the early stages of going through a double dip.”
This was believed to largely impact Malaysia’s manufacturing and services growth performance going forward. Kenanga Research added that, even if there were expectations of a possible rebound in global growth in the second half of 2013,k it reckoned that it would still be hard pressed for Malaysia to gain a significant growth traction given the higher base in the first half.
It thus maintained its earlier GDP forecast of 4.7 per cent for the whole of 2013.
(Source: The Borneo Post)